CNN LATE EDITION WITH WOLF BLITZER

Interview With John Ashcroft; Will New FBI Satisfy Congress?; Can India, Pakistan Resolve Conflict Without Going to War?

Aired June 2, 2002 - 12:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. WOLF BLITZER, HOST: It's noon in Washington; 9:00 a.m. in Los Angeles, 9:30 p.m. in New Delhi; and 10:00 p.m. in Islamabad. Wherever you're watching, from around the world, thanks for joining us for LATE EDITION.

We'll get to our interview with the U.S. Attorney General John Ashcroft in just a few minutes, but first, a news alert.

(NEWSBREAK)

BLITZER: A short while ago, I spoke with the U.S. attorney general, John Ashcroft, about the restructuring of the FBI, what it means for the agency's counterterrorism efforts and the concerns that the changes could jeopardize civil liberties.

(BEGIN VIDEOTAPE)

BLITZER: Mr. Attorney General, thanks for joining us on LATE EDITION. Always good to have you on our program, especially during these very, very difficult times.

It's almost nine months since September 11. Could it happen again?

JOHN ASHCROFT, U.S. ATTORNEY GENERAL: Well, obviously the terrorist threat exists. We're at war. We have 550-or-so million people cross our borders every year. That's standard operating procedure for the United States. They sent tens of thousands of people through their training camps. You would really not expect that if they sent tens of thousands of people through for a very limited, one-day operation -- I don't mean to say that it was a limited operation, but that that was their only intent.

al Qaeda wants to kill us, that's their stated purpose. They've stated it since September the 11th. So we have a real job of preventing terrorism, of taking steps to make sure that what happened before doesn't happen again.

BLITZER: So could it -- but could it -- you say tens of thousands were trained. I assume most of them are still at large.

ASHCROFT: Well, obviously a large number of individuals who went through the training camps in Afghanistan of the al Qaeda organization are at large. And there are other terrorist groups that have associated themselves with al Qaeda. So we believe there, and I believe, there is a very serious, continuing threat of terrorist attack, and we need to do everything we can to make sure it doesn't happen again.

BLITZER: It could be worse, though, the next time around, given the capabilities that presumably they might have. 9/11, with hindsight down the road, could be relatively small compared to the next terrorist strike.

ASHCROFT: Well, 9/11 could have been worse. I mean, we had heroic activity on the part of a number of individuals that minimized the 9/11. The people who were evacuated from the World Trade Center. Think about the heroic activity on, what was it, Flight 93, I think that's what it was, coming back from Pennsylvania. They crashed in the farm field there, because some citizens decided they would crash on a field in Pennsylvania instead of on Pennsylvania Avenue.

Now, in my judgment, we know that the al Qaeda organization is interested in weapons of mass destruction. We know that they're interested in biological weapons. We know that they're interested in that kind of capacity to wreak havoc on a large scale. And so -- chemical weapons.

Seems to me that we've got to do every -- prevention has to be -- and that's the reason we had the major renovations that we continue to announce in this week at the FBI.

BLITZER: We're going to get to that in a second. But where is the U.S., in your opinion, and you've studied this now very closely -- long before you were the attorney general, you were studying this, when you were in the U.S. Senate. Where is the U.S. right now most vulnerable?

ASHCROFT: Well, we're improving and strengthening our position. We are improving our ability to collect intelligence, our ability to analyze it, our ability to communicate within the government. And those are things which I think we learned we needed to improve in the September 11 episode, and we're taking steps immediately when we can.

I'm not going to announce, "Here's where we're weakest" so that someone somewhere around the world can say, "Well, this is where we ought to focus our energy to try and point our resources at a weak point in the United States." It wouldn't be productive, and I don't think that's valuable. It certainly wouldn't be in the best interest of the United States.

We are improving our capacity to understand and to anticipate and prevent. Information, of course, is the best friend of prevention, and that's why it's important that we have the ability both to gather information and, once having gathered it, to interpret it, to analyze it.

BLITZER: I want to get to the reforms you announced, you and the FBI Director Robert Mueller announced earlier in the week. But on this issue of vulnerability, the suicide bombings that have become so familiar to all of us, in Israel, for example, could those suicide bombings, kind of mall attacks, cafeterias, coffee shops, discotheques, could that happen here in the United States?

ASHCROFT: I don't believe we can rule out any kind of terrorist attack. And as soon as we say, well, something couldn't happen here, that probably elevates the risk that it could happen here, because it would reduce our sensitivity, it would reduce our vigilance. We know that the Oke-bomb (ph) situation, when Timothy McVeigh -- it wasn't a suicide bombing, but that was a very substantial terrorist act that took the lives of close to a couple hundred people...

BLITZER: In Oklahoma City?

ASHCROFT: Yes, in Oklahoma City.

So, we need to be involved preparing to prevent. We don't need to be involved in trying to think, well, what is it that we can get smug about and think that can't happen here?

My goodness, we need to understand that we need to do everything possible to strengthen our prevention. The American people have a reasonable expectation that that's what we focus on.

BLITZER: The American people, though, have lost a lot of confidence over the years, not just since you took office, in the FBI. Look at these poll numbers. We've gone back, our Gallup poll -- CNN- USA Today Gallup poll. In 1965, you can see it up on the screen, 84 percent of the American public had a very favorable opinion of the FBI. That's gone down. In '73, it was 52. Right now, only 24 percent, less than a quarter, of the American public has a very favorable opinion of the FBI.

And, you know, given all the news stories over these past few weeks about failures to connect the dots, as they say, that number presumably could go down even further.

ASHCROFT: Well, I think what we need to do is to make sure that we develop the strategy of reform and renovation at the FBI that's going to give us the capacity to do what the American people want most: prevent the next terrorist attack.

This last week, we spent the week announcing the second round of structural reforms by the FBI director, Robert Mueller and they're substantial. He's totally renovated, completely changed the anti- counterterrorism unit.

BLITZER: You have confidence in him?

ASHCROFT: He is the right man for a very tough job, you know.

BLITZER: You know, The Wall Street Journal editorial page -- a conservative editorial page, not a liberal editorial page -- wrote this on Friday: "It's no surprise that President Bush and Attorney General Ashcroft are standing by their man. Mr. Ashcroft this week praised him as a battle-tested leader and the right man for the job. The director could relieve their embarrassment by completing this week's mea culpa with an honorable resignation.

ASHCROFT: Well, very honestly, this is a battle-tested veteran. He knows he's taken bullets for America. He did it in Vietnam. He was awarded the gallantry medals in a variety of things. He has devoted his life to improving security in the United States.

And at the FBI, he began to make changes immediately. Of course, he was on the job for less than a full week, I believe, when September 11 hit, and he has begun to restructure it.

Twenty-five percent of the leadership of the FBI is changed. He's refocused the vision on counterterrorism. He has now developed a strategy for the FBI of hiring experts in a variety of important fields, whether it's linguistics or computers or engineering or the other kinds of analysis.

I issued regulations last week, not just to strengthen the FBI in Washington and its ability to coordinate and assemble the puzzle pieces and to put them in the right place when they're in Washington, but we wanted to strengthen the hand of people out in the field. We've gotten letters. We've gotten information from people in the field saying we need to make adjustments.

And one thing I think we ought to credit Bob Mueller with is he's capitalizing on those suggestions to make improvements, and we're doing the same.

BLITZER: He said this -- and I want to juxtapose these two comments that he made, because some of the concern that The Wall Street Journal had, and others, comes from these statements, conflicting statements he seems to have made.

Listen to what he said on September 17 of last year, only a few days after 9/11, he said this.

(BEGIN VIDEO CLIP)

ROBERT MUELLER, FBI DIRECTOR: There were no warning signs that I'm aware of that would indicate this type of operation in the country.

(END VIDEO CLIP)

BLITZER: That's what he said flatly.

This is what he said on Wednesday: "I can't say for sure there wasn't the possibility that we would have come across some lead that would have led us to the hijackers."

There were warning signs out there, yet he immediately rushed to the microphone after 9/11 and said there were no warning signs. That has raised questions about his credibility.

ASHCROFT: Well, I think his credibility comes from what he's doing in the department right now. He's renovating the department, he's instituting reforms. He's developed the capacity in Washington -- and we're going to not only have an improved human capacity, but an improved computer and technical capacity to get pieces together, to understand.

You know, you've got 11,000 agents in the FBI, 11,000 people who know bits of information, some of them about terrorism, some of them not. You've got 55 districts in America that cover that. We've got 44 offices overseas. And having the information come in is important, having ability to link it up and to connect the dots, as you say, is...

BLITZER: It's not within the FBI, it's with other agencies like the CIA...

ASHCROFT: Absolutely.

BLITZER: ... the White House and the NSA, the National Security Agency and...

ASHCROFT: The State Department...

BLITZER: Are you confident right now that that kind of communication between the various agencies involved in law enforcement, preventing terrorism, that that has now been worked out, that everybody is working together?

ASHCROFT: Well, we are working together in a significantly better way than we've ever done before. Reports that used to be generated, that were almost competitive between the one agency and another are now jointly generated.

BLITZER: Are they sharing all the information, the CIA and the FBI, that they didn't share before 9/11?

ASHCROFT: You know, their effort at sharing has now been reflected in the fact that there are CIA people stationed at the FBI and FBI people stationed at the CIA.

The Patriot Act, passed shortly after September the 11th, allows a far greater level of sharing. It used to be that certain kinds of sharing were prohibited by law. And we needed -- just as we needed new rules and regulations regarding FBI agents in the field and what kinds of things they could do, we needed to redo our efforts that allowed an interchange between intelligence resources, domestic and international.

(END VIDEOTAPE)

BLITZER: We have to take a quick break. When we come back, I'll ask the attorney general who, if anyone, will be held accountable for the intelligence failure before 9/11.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. We return now to my interview with the U.S. attorney general, John Ashcroft.

(BEGIN VIDEOTAPE)

BLITZER: I know you want to focus on the future, but some members of Congress are focusing on the mistakes of the past. Republican Senator Charles Grassley of Iowa, he was on American Morning on CNN with Paula Zahn earlier this week. Listen to what he said.

(BEGIN VIDEO CLIP)

SEN. CHARLES GRASSLEY (R), IOWA: Those people who covered up and didn't cooperate fully with Minneapolis, as per the Ms. Rowley whistle-blower letter, they should obviously be disciplined, demoted, fired. But heads have to roll in a bureaucracy in order for a message to get through.

(END VIDEO CLIP)

BLITZER: Will someone or individuals who missed the various signals out there, will they be held accountable?

ASHCROFT: Yes, I believe they will be, if in fact, it's merited and appropriate.

You know, one of the things Bob Mueller did immediately was to ask the inspector general to review this situation to make sure, even though he has renovated and completely changed the leadership for counterterrorism unit, he's asked for this kind of review, as well, that's independent. He's making the kinds of resource redeployments, if you will, but not just in the counterterrorism section, across the FBI generally.

The FBI is going to be new institution. Greatness is determined or at least reflected in institutions by whether or not they can adjust to changing times. Times are different than they were in the '60s and '70s. The FBI needs to be ready for the next two decades, not ready for the last two decades.

BLITZER: You know that you've been criticized, as well, for some of the decisions you made before September 11. Today's New York Times has this paragraph, and I'll give you a chance to respond.

It says this: "In a September 10 submission to the Bush administration's budget office, Mr. Ashcroft refused to endorse an FBI request for $58 million for 149 new counterterrorism field agents, 200 additional analysts, and 54 additional translators. He also proposed a $65 million cut for a program that would have given state and local counterterrorism grants for equipment and training. After September 11, Mr. Ashcroft proposed $2 billion for FBI counterterrorism measures."

ASHCROFT: Well, first of all, I think that kind of article is misleading. What we have is a massive increase in counterterrorism expenditures, at the FBI and in the Justice Department, in the budget year in question.

And to go into the budget formulation, where there's a lot of give and take, and you ask people, "Justify this, and tell us how that'll be spent," what you have to look at is what happens in the budget. The budget massively deploys additional resources to curtail terrorism, and curtail it by prevention means, and that's what we ought to be focused on, and that's what is going to happen.

BLITZER: I guess the point that some of the critics, your critics are saying is that -- and obviously, we're all smarter with hindsight -- but did you yourself appreciate this terror threat before 9/11 that obviously all of us have come to appreciate after?

ASHCROFT: Well, I don't think anybody appreciated it before like we do after. You know, anybody who tells you that they were as aware of terrorism before September 11 as they are now will lie to you about other things too.

But I will say this, that I made a statement to the Congress in May of last year -- that's three or four months -- that terrorism was a top priority, may have been the top priority, I think that was my statement to the Congress, of the department.

And we were developing an awareness that we had had these problems, mostly overseas. You know, we had had Khobar Towers, where our military people were killed, we had Nairobi, Kenya, where our embassy, and Tanzania...

BLITZER: There were plenty of warning signs out there.

ASHCROFT: We had lots of terrorist activity. We hadn't had it strike the homeland.

BLITZER: Could it have been prevented, though, if people would have been paying closer attention?

ASHCROFT: You know, we're at war now, and I'm working on prevention. The Joint Committee of Intelligence of the House and Senate is working on assembling all the various things. We've sent thousands -- tens of thousands of documents from the Justice-FBI part of the equation. They'll be -- and my view is that I'm not going to try to speculate at this time, but I believe that prevention -- we've got a wartime situation, we've got al Qaeda with real strength around the country and around the world. And we need to make sure that we're doing everything possible to prevent the next attack. That's what the American people expect of us, and that's why we're making the reforms. That's why Mueller announced a second wave of real reform last week. That's why I announced the new investigation guidelines.

BLITZER: It's an incredibly difficult balancing act, to prevent terrorism while at the same time protect civil liberties for Americans. The New York Times, in an editorial on Friday, wrote, "In reality, Mr. Ashcroft, in the name of fighting terrorism, was giving FBI agents nearly unbridled power to poke into the affairs of anyone in the United States, even when there was no evidence of illegal activity."

Now, that's the New York Times, which he could dismiss as a liberal editorial...

ASHCROFT: Well, I don't think we want to dismiss it, calling it liberal. Let me just dismiss it because it's patently false.

BLITZER: Well, listen to what ...

ASHCROFT: Poking into the affairs of people? Let me read for you...

BLITZER: Do you want to listen to what Representative James Sensenbrenner...

ASHCROFT: Oh, I can, sure.

BLITZER: Listen to what -- because he seems to say the same thing. He's the chairman of the House Judiciary Committee, conservative Republican. Listen to what he said on Novak, Hunt and Shields here on CNN.

(BEGIN VIDEO CLIP)

REP. JAMES SENSENBRENNER (R), WISCONSIN: I believe that the Justice Department has gone too far in changing the domestic spying regulations that have been on the books for 25 years and which were originally promulgated by a Republican administration.

(END VIDEO CLIP)

BLITZER: Those were originally promulgated by the then-Attorney General Edward Levi in the Ford administration. You and I are old enough to remember in the '70s what was going on there.

(LAUGHTER)

ASHCROFT: I'm almost as gray as you are...

(LAUGHTER)

... but I'm bolder than you are.

Let me just tell you what the heart of this controversy is. Let me read to you the regulation.

BLITZER: OK.

ASHCROFT: Because I think the regulation itself is -- "For the purpose of detecting and preventing terrorist activities" -- narrow purpose -- "the FBI is authorized to visit any place and attend any event that is open to the public on the same terms and conditions as members of the public generally." That's it. The FBI can, if there's a rally, an anti-American rally on the square, they can walk up and listen to what's being said. The FBI, according to this, can surf the Net to find bomb-making sites, which there had been a regulation saying that surfing the Net just looking for bomb-making sites without a specific lead was illegal. Now, any 12-year-old can do that.

Well, the New York Times says this is an invasion of a person's private activities. This is strictly limited to public activities.

Alan Dershowitz is a well-known...

BLITZER: Harvard law professor.

ASHCROFT: Well, a well-known civil libertarian. He says this doesn't violate privacy laws. It doesn't infringe the Constitution. Lawrence Tribe, perhaps the most noted constitutional scholar, happens to be liberal individual, but he is a great scholar. He says this doesn't infringe the Constitution. It doesn't.

Let me tell you what these are. These are not changes in the law. These are not changes in the Constitution. These are changes in regulations of the department. And these departmental regulations were designed to address the issues of the 1970s. And frankly, we need to be able to address the issues of the year 2000, 2002, 2010, 2020.

And for us to think we've got to be locked -- you know how hard it is to change things. We've tried to get the Patriot Act provisions through the United States Congress in the '90s, and the Congress wouldn't pass those provisions. They did after September the 11th.

And it strikes me as very strange to see that something as simple as allowing the FBI to surf the Net in order to get bomb-making sites and to identify where they are and what's on them is now thought be a threat. I mean, I just don't see that.

BLITZER: I'm going to let you go in a minute, because I know you have to go. But who is going to make sure that some of the abuses that were so widely publicized in the '60s...

ASHCROFT: This is a great question. Let me address that.

BLITZER: ... and '70s, that Congressman Sensenbrenner is concerned about with Martin Luther King and things like that, who's going to make sure that the FBI doesn't go beyond what you're saying that they will do?

ASHCROFT: Well, the provisions of these regulations specifically admonish against doing what was done there. It's wrong to keep the kind of dossier and records and folders and informational file on public officials or on religious leaders or cultural leaders.

The privacy laws of the United States relate to this, and they're in place now that weren't in place then. So both the laws passed by the Congress and the regulations that I've recently promulgated reinforce the safeguards. But they do not tie the hands of our agents. You know, when agents have come to us, like Ms. Rowley from Minneapolis and people from around the country, with advice, we want to be able to respond. And one of their clearest points of advice is, untie our hands. Don't allow a situation to exist where we have to wait for authority from the bureaucracy in Washington, which sometimes garbles an understanding of what we really need to do, sometimes doesn't give the authority when we should be able to pursue it.

I untied those hands in substantial measure last week. Mueller is changing the configuration of the administration in Washington to make sure that we do a better job.

Prevention of the next terrorist attack is serious business, and we take it responsibly.

BLITZER: Just ahead, the FBI's handling of September 11 clues has again put the agency under public scrutiny. But will the new FBI satisfy the U.S. Congress? We'll hear from two influential members of the United States Senate, Republican Kay Bailey Hutchison of Texas, and Democrat Dianne Feinstein of California.

LATE EDITION will continue right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The FBI needed to change. It was -- organization's full of fine people that loved America, but they -- the organization didn't meet the times.

(END VIDEO CLIP)

BLITZER: President Bush making the case for a reorganization the FBI. Welcome back to LATE EDITION.

On Thursday the FBI director, Robert Mueller, will testify before the Senate Judiciary Committee about his agency's performance. Lawmakers are also expected to hear from Coleen Rowley, the FBI whistle-blower who criticized the Bureau for its handling of the September 11 clues.

Joining us now are two important members of the United States Senate: In Dallas, Republican Senator Kay Bailey Hutchison. She serves on the appropriations committee. And here in Washington, Democratic Senator Dianne Feinstein of California, a member of the Judiciary Committee. She's also a member of the Intelligence Committee.

Senators, welcome back to LATE EDITION.

Senator Feinstein, let me begin with you. Do you have confidence in the FBI director, Robert Mueller, and the changes he announced this week?

SEN. DIANNE FEINSTEIN (D), CALIFORNIA: Yes, I do. He's always done a good job in his professional career. I think there's no reason to believe that he won't do a good job.

I think the question right now is to see if the reorganization that he's put forward is the right plan, to see that there is a measure of overlap between the CIA and the FBI is effective, to see that the 56 regional offices of the FBI have some authority to engage in the kind of investigations you need with respect to terrorism which is different from crime. And I think the third thing is that the bits and pieces can go very rapidly to all source intelligence analysis. That's what hasn't happened in the past.

BLITZER: Senator Hutchison, what about you? Do you have confidence in Director Mueller?

SEN. KAY BAILEY HUTCHISON (R), TEXAS: Yes, I think we need to give him a chance to really change the climate at the FBI. I was most concerned about the lack of ability to gather the intelligence, to listen to the field offices, to put that through some kind of grid and make some kind of determination that there was a thread here that constituted a real threat.

I think he is on the road to doing that, and I think we need to continue to pursue it with him and make sure that that is the new climate at the FBI.

BLITZER: What about, Senator Hutchison, some of the concerns that have been expressed about these new policies, these new procedures the FBI will engage in? You heard the Republican chairman of the House Judiciary Committee, James Sensenbrenner, express some of those concerns.

But the ACLU has gone out and expressed even more concerns about it. Listen, for example, to what Laura Murphy of the ACLU said earlier in the week.

(BEGIN VIDEO CLIP)

LAURA MURPHY, ACLU: People who go to places of worship, people who go to libraries, people who are in chat rooms are going to have big brother listening in, even though there's no evidence that they are involved in any thing illegal whatsoever.

HUTCHISON: Well, if what she said were factually correct it would because America does value its civil liberties. But I think there will be a probable cause, some kind of evidence that would show that that particular gathering was a place where there were either known terrorists or people that the intelligence-gathering operation had shown to be violating the law or perhaps importing something that would be a terrorist act.

So I think there will be evidence. I think Attorney General Ashcroft has said that. But I don't think we're going to tie our hands in this county ever again from being able to rout out and protect ourselves from crimes before they happen.

BLITZER: Senator Feinstein.

FEINSTEIN: Yes, I want to make two points. The first is, in this particular al Qaeda-based, Muslim extremist terrorism, there is a nexus between the religious institutions in this country and some of the cells. Some of the religious institutions, some of the NGOs are covers for some of the people...

BLITZER: NGOs being...

FEINSTEIN: Non-governmental organizations -- are covers for people who are operating in the shadowy world of terrorism. This is a challenge for our form of government.

The second point I want to make is that this isn't the 1960s, when J. Edgar Hoover reigned supreme over the FBI and everybody was afraid to stand up and point out any idiosyncrasy or problem with the FBI. This is the next millennium. And there is press scrutiny. There is government oversight that there was not in the 1960s.

The Judiciary Committee, you can be sure, is going to be holding oversight hearings over the FBI. And the Intelligence Committee, of which I'm a member, is now holding a major inquiry, taking a look at the bits and pieces, has hundreds of thousands of pieces of documentation now that are being going over to see what was missed and how we can improve for the future.

BLITZER: Senator Feinstein, you are a member of the Intelligence Committee. There's a very disturbing report today in Newsweek magazine. Our Kathleen Koch reported it at the top of this program.

But the report by Michael Isikoff suggests that two of the 19 hijackers -- and we'll put their pictures up on the screen -- Nalwaq Al-Hazmi (ph) and Khalid Al-Midhar, that they were being followed, they were being observed by the CIA for months and months and months before 9/11, but that the CIA, basically, until the very end, never bothered to tell the FBI about this.

I want you to listen to what Isikoff said on CNN earlier today.

(BEGIN VIDEO CLIP) MICHAEL ISIKOFF, NEWSWEEK: This is probably the biggest intelligence failure surrounding the events of September 11 of all. And in some way -- in many ways, it dwarfs the disclosures that have come out about the FBI and its failure to act on warnings from its field offices in Phoenix and Minneapolis, because this does involve two of the hijackers.

(END VIDEO CLIP)

BLITZER: And those two hijackers were aboard American Airlines Flight 77 that went into the Pentagon.

FEINSTEIN: Right.

BLITZER: How accurate -- first of all, of you're brief on all this kind of stuff. This sounds shocking to a lot of people.

FEINSTEIN: Well, this isn't new news for the inquiry. The people working, the professionals working on the intelligence -- the joint committee intelligence effort, know about this, and they are looking at it, and it's going to be the focus of our hearing. So this is not new news.

BLITZER: It's new news for the public at large...

FEINSTEIN: I gather...

BLITZER: ... not for you.

FEINSTEIN: ... that's right, but I gather the information wasn't transmitted until August, between the CIA and the FBI -- August before the attacks. So some hard questions have to be answered.

But I don't think this is the only revelation that's going to come forward. I suspect there are numbers of bits and pieces. They weren't put together. They either didn't get to the all-source intelligence analysis or they were missed in the process.

But I think we're going to find, when we look at everything, that there was a pattern, that there were several bits and pieces, there were several things that could have been investigated, had investigation been looked at as a way to go, which it wasn't.

BLITZER: So you're saying beyond the Phoenix memo that warned of Middle Eastern men learning how to fly planes at American flight schools, beyond the memo from Minneapolis, the FBI agent out there, Coleen Rowley, warning about Zaccarias Moussaoui, the so-called 20th hijacker, and now beyond this Newsweek story that Michael Isikoff reports, there's more evidence there were other alarm bells out there that people weren't paying attention to?

FEINSTEIN: I believe there probably are.

BLITZER: Do you want to give us some indications what they are?

FEINSTEIN: No, no. BLITZER: All right.

FEINSTEIN: But I think our inquiry will bring this forth. We'll have both closed hearings, so we don't jeopardize sources and methods, and then we'll have open hearings that will discuss much of this.

BLITZER: All right, Senator Hutchison, we're going to pick up on that thought with you when we come back.

But we have to take a quick break. Much more to discuss with Senators Hutchison and Feinstein. They'll also be taking your phone calls. LATE EDITION will be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ASHCROFT: Where there are responsible changes to be made, we will make them. Where there are mistakes to acknowledge, we will not shy away from doing so.

(END VIDEO CLIP)

BLITZER: The U.S. attorney general, John Ashcroft, this past week announcing new guidelines for FBI counterterrorism operations.

Senator Hutchison, I want to pick up the point that I was discussing with Senator Feinstein, the fact -- or at least the report now that two of those 19 hijackers were being followed, were being cased for months and months and months by the CIA, but until August of last year no one at the CIA bothered to inform the FBI of this investigation.

Now, what goes through your mind when you read about this, when you hear about this?

HUTCHISON: Wolf, I think it is no surprise to anyone who is in the United States Congress that the FBI and the CIA did not communicate. They were separate organizations. The CIA, obviously, doing foreign intelligence gathering, the FBI not doing intelligence gathering at all, but trying to investigate crimes after they occurred.

One of the changes that is, I think, being made now, which must be made, which Congress must assure is being made is that the CIA and the FBI are exchanging information, so that all of the little dots can be connected that were not connected before September 11.

As Senator Feinstein said, we're going to find out that there were lots of clues out there, but the lack of communication and the lack of intelligence analysis in our country is what the problem was, and we need to correct that. BLITZER: All right. Let's take a caller from Nevada. Go ahead with your question, please.

CALLER: Yes. My question just relates to the new FBI directives. Why are we not just coming straight out and recognizing the fact that we need to profile young Middle Eastern radical factions that are in our country, and specifically direct our attention toward them, and actually go right out and address them as the ones that we are really looking for, and that they should be the ones to be aware that these directives are focused directly at them?

BLITZER: Senator Feinstein?

FEINSTEIN: Yes. This brings up the whole debate of racial profiling, which I believe -- and I didn't initially, but I believe has played a role in the reticence of the FBI. I believe it played a role in the reticence to really move ahead with Mr. Williams' memo. I believe it played...

BLITZER: He was that Phoenix -- the FBI agent.

FEINSTEIN: The Phoenix memo, yes. I think this is a real issue here, and I think we're going to have to come to terms with it and take a good look at it.

BLITZER: So what you're saying is, the FBI was reluctant to get involved in these investigations...

FEINSTEIN: Well, that's right.

BLITZER: ... because they could have been accused of the politically incorrect notion of getting involved in racial profiling.

FEINSTEIN: That's right. And if you take a look at it, at this stage, at least, one isn't going to look for blond Norwegians.

Now, that may change in the future, but I think the racial profiling debate has created a kind of disservice, if you will, in the terrorism area, particularly with respect to the FBI. I believe it has had a chilling impact.

BLITZER: On the culture.

What about that, Senator Hutchison? Do you want to weigh in on this whole issue of profiling?

HUTCHISON: Well, I think that, when you go to where the clues are, to the charities that have been shown to be a cover for terrorist organizations, to even some of the religious, quote, unquote, organizations that have been shown to be a cover, educational institutions that are a cover, I think that you are going to naturally get there. You can set a standard that doesn't have race in it, but it is going to show that these people are in our country doing these things that are creating terrorist networks right here.

FEINSTEIN: Yes, it can happen again. You have to realize that the very openness of this country, the freedoms that we so value are one of the reasons why the terrorists have been able to gain the foothold in this country they have. Let there be no question. You know, there are literally hundreds of cells that operate in this country, they operate in the least likely places.

Kay just, I thought, very aptly pointed out charities are guises to often funnel monies to terrorist operations, or families of terrorists, religious organizations kind of shelter meetings that take place which are terrorist-inspired, jihad-inspired, kill-the-infidels kind of inspired. And we have to have an apparatus that's able to evaluate these things without stepping on the freedoms that we so prize. And that's a difficult thing to do.

BLITZER: How do you that, Senator Hutchison? How concerned are you about that?

HUTCHISON: We must do it. We must protect this country. We must have more people.

One of the things that has come out is that we have too few people who actually understand the language and the culture to pick up some of these clues. We need to bring people in who can help us. We had, really, hundreds of volunteers to do that, people who are Arab- Americans or Muslims, who could help us with language, came in after September 11 and did volunteer to do it.

Now we need to turn that into an operation that is part of our intelligence gathering, where we have the capability to put all these things together to dissect and interpret what is coming in that is a clue that we need to protect from a future kind of occurrence like September 11.

BLITZER: All right, Senators, I want both of our senators to stand by. We have to take another quick commercial break.

When we come back, we'll be taking more of your phone calls. LATE EDITION will return.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. We're talking with Republican Senator Kay Bailey Hutchison of Texas and Democratic Senator Dianne Feinstein of California.

I want to switch gears, Senator Feinstein, talk about not about the war on terrorism directly, but another potential war, a war between India and Pakistan that could -- could lead to a nuclear exchange.

First of all, listen to what leaders of both India and Pakistan have been saying over the past day to try to reassure the world. Listen to this.

(BEGIN VIDEO CLIPS)

GENERAL PERVEZ MUSHARRAF, PRESIDENT OF PAKISTAN: Pakistan does not want war. Pakistan will not be the one to initiate war. We want peace in the region.

ATAL BIHARI VAJPAYEE, PRIME MINISTER OF INDIA: India has not ever spoken of nuclear weapons. India's policy in this regard is clear, unambiguous and explicit. It is no first use, and that remains the country's policy.

(END VIDEO CLIPS)

BLITZER: Despite those words of reassurance, how concerned should the world be about a possible nuclear war between India and Pakistan?

FEINSTEIN: Very, there is no question about that. Both countries are indigenous nuclear powers. India has a clear no-first- use policy; Pakistan does not. The Indian military is about twice as big as the Pakistani military. So I think it's a very dangerous situation.

I know in the past I've tried to get two sides together through ambassadors, found it extraordinarily difficult. Each side has a reason why they don't want to talk with the other side at a particular point in time.

We know that India's troops are moving up to the Kashmiri border. I'm very concerned. I think General Musharraf has to make very clear, over and over and over again, that there will be no first use by nuclear power by his nation, and I have not heard that directly said up to this point.

BLITZER: What about that, Senator Hutchison? What, if anything, can the United States do about it? As you know, the defense secretary, Donald Rumsfeld, is heading there next week. The deputy secretary of state, Richard Armitage, is on the way.

But can the United States get both countries to step back from the brink of potentially nuclear war?

HUTCHISON: We're certainly going to try, as we should. I think that you see what both heads of the counties have said, that they wouldn't use nuclear weapons, but we also hoped that they wouldn't test them, and they have.

We need to be very, very careful here, and particularly, of course, because our people are in that region. We are fighting right next to Pakistan in Afghanistan to try to clear out that terrorist network. And this is a huge problem for us, and one that we need to do everything possible to placate both sides, to bring them to the table. They have not been talking about the Kashmir situation seriously. We need to a lot more dialogue and a lot less saber- rattling.

BLITZER: And we'll have much more on this particular issue in the second hour of LATE EDITION, when we speak to both the Indian and the Pakistani ambassadors here in the United States.

Senator Feinstein, yesterday President Bush spoke at the West Point graduation ceremony. He had some pointed words and a threat out there as well. I want you to listen to what specifically he said in the U.S. war against terrorism.

(BEGIN VIDEO CLIP)

BUSH: If we wait for threats to fully materialize, we will have waited too long.

(APPLAUSE)

Homeland defense and missile defense are part of a stronger security. They are essential priorities for America. Yet the war on terror will not be won on the defensive. We must take the battle to the enemy, disrupt his plans and confront the worst threats before they emerge.

(END VIDEO CLIP)

BLITZER: Senator Feinstein, who specifically is he addressing?

FEINSTEIN: Well, I think this is a predicate for an attack on Iraq, and I'm very concerned about it. I think it would be a terrible mistake for the United States, unilaterally, to attack Iraq, and to do so without any congressional authorization.

The authorization we gave the president with respect to 9/11 was very precisely crafted to connect the use of force with those who either perpetrated or were connected to 9/11. Iraq was not. And therefore I think a pre-emptory attack without full debate in the Congress would be a terrible mistake.

BLITZER: But you think the president's getting ready for that kind of pre-emptive strike against Iraq?

FEINSTEIN: In my view, based on that statement and other things that I have heard, I think so. And I think -- I'm probably more concerned by this than by anything else, because if you do this and you leave unsettled the Israeli-Palestinian crisis, which is a real full-blown crisis, I think you turn the whole Muslim Middle East world against the United States.

We don't need this, because we haven't won our own war yet in Afghanistan or in other places.

BLITZER: Do you agree with Senator Feinstein, Senator Hutchison?

HUTCHISON: Well, Wolf, I think it is time for us to seriously look at a congressional mandate for the war on terrorism. We didn't technically declare this war, which Congress has the responsibility to do, because we couldn't declare war on a certain country, which is what we have always done before.

But I think the war on terrorism needs to be elevated, because I believe we are going to have to go into terrorist networks wherever they may be.

I think we are in the process of making the case with Iraq. I mean, we don't have weapons inspectors in there, we have all the evidence in the world that he's making weapons.

At the same time, I think we have other networks. I don't think the president was specifically referring to Iraq, but I think he was saying we are going to have to rout out this terrorism where it is.

HUTCHISON: Having said that, I think the Arab countries must be a part of this solution. We are not going to be able to have some kind of agreement with Arafat alone. It must be a regional solution which will include the moderate Arab countries.

BLITZER: Senator Feinstein and Senator Hutchison, we have to end right there. But before I do end it, I want to show our viewers here in the United States and around the world this new issue out today, Parade magazine, which goes to tens of millions of American homes, a newspaper supplement every Sunday, about women in politics, who will become president?

Look at this. On the cover, four women: Senator Dianne Feinstein, Senator Kay Bailey Hutchison, two of our guests today; Condoleezza Rice, she was on our program two weeks ago; Nancy Pelosi was on, I think, last week.

Very, very quickly, Senator Hutchison, are you planning on becoming president of the United States one of these days?

HUTCHISON: No one plans to become president, but certainly, Wolf, it shows that you have good instincts about the people that you interview.

BLITZER: All right, Senator Feinstein, do you want to be president?

FEINSTEIN: I would just say ditto to what Kay has said.

(LAUGHTER)

BLITZER: Neither one of you ready to announce today?

FEINSTEIN: That's correct.

BLITZER: All right, but we'll be watching your careers, and we'll be having you on this program obviously early and often, as your careers continue to unfold.

Thanks to both of you for joining us.

HUTCHISON: Thank you.

FEINSTEIN: Thank you.

BLITZER: We appreciate it very much. And coming up in the next hour of LATE EDITION, the India- Pakistan standoff. Can the two U.S. allies avoid war? We'll talk with ambassadors from both countries.

Then, two guests with inside knowledge of the FBI. They'll weigh in on whether the agency is up to the job of fighting terror.

Also, Britain's Queen Elizabeth marks 50 years on the throne. We'll get some insight into the impact of her reign.

Plus your phone calls, letters, Bruce Morton's essay, all of that when LATE EDITION returns.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION.

We'll get to the Indian and Pakistani ambassadors in just a moment, but first, the latest on the escalating nuclear tensions in South Asia. We have correspondents on the ground in both Pakistan and India.

(NEWSBREAK)

BLITZER: Despite calls for both countries to exercise restraint, tensions between India and Pakistan remain high, with violence continuing in the disputed territory of Kashmir.

Joining us now are representatives from both countries. In New York, India's ambassador to the United Nations, Vijay Nambiar. And here in Washington, Pakistan's ambassador to the United States, Maleeha Lodhi.

Ambassadors, good to have you our program. Thanks for joining us.

Ambassador Nambiar, you've only recently arrived here in the United States.

VIJAY NAMBIAR, INDIA'S AMBASSADOR TO U.N.: That's right.

BLITZER: Give us your sense, how close are the two countries to war right now?

NAMBIAR: The question is, what kind of action can be taken to prevent any kind of situation erupting of open hostilities? The central issue here is to put a stop to cross-border terrorism and to show some action on the ground.

As President Bush said even yesterday, if we wait for attacks to fully materialize, we will have waited too long. Without any subtext from the Indian point of view, I would say that we have already waited quite long. How long are we to wait to put a stop to cross-border terrorism?

BLITZER: All right. NAMBIAR: I think it's most important that some action be taken on the ground.

BLITZER: Ambassador Nambiar, stand by. I want to bring in Ambassador Lodhi. I want to also make sure we fix your microphone. We're getting a little disturbance over there.

Ambassador Lodhi, you heard the Indian ambassador say stop what he calls these infiltrations, the cross-border terrorist infiltrations into the Indian part of Kashmir. Is President Musharraf capable of doing that right now?

MALEEHA LODHI, PAKISTAN'S AMBASSADOR TO U.S.: President Musharraf has already demonstrated to the world community that he's a man of his word. He's also demonstrated that Pakistan stands for peace. We have gone the extra mile for peace, and we have tried to do whatever we can to avert the possibility of a conflict.

But it doesn't help if the other side does not reciprocate. Every suggestion that we make -- for example, one very reasonable suggestion that we have made consistently is for an impartial, neutral mechanism of force, a monitoring force to be placed at the Line of Control, so that these allegations can be verified and so that for the future also we have a framework within which we can deal with a crisis.

BLITZER: All right, let's pick up that point. Ambassador Nambiar, what about that, allowing some observers to come in and monitor what's called the Line of Control on Kashmir, the disputed territory that separates the Pakistani from the Indian forces?

NAMBIAR: The question is essentially one of trust. I think after the January 12 statement, it was felt that perhaps some action would be taken. But we found that after some months, the same leaders who had been placed under detention were released. The organizations that had been banned were allowed to function under different names and the infiltrations -- the rate of infiltrations continued.

What is the purpose of making statements if they are not actually implemented on the ground? The same kind of credibility that is needed in respect of the actions which the president has taken, vis-a- vis Afghanistan, if we are able to -- if he is able to seal, as he said, the frontier in time...

BLITZER: But if there's a dispute over the infiltrations -- you're ambassador to the United Nations now...

NAMBIAR: Yes.

BLITZER: Why not let the U.N., for example, or some other international observer force come and take a look and see if the Pakistani government is allowing these infiltrations to cross over?

NAMBIAR: We have monitors apparently established on Afghanistan, and they took about six to eight months, perhaps, to even to set up the group. Five members and they've not been able to do anything. In '88, after the Geneva conference in Afghanistan also, there were monitors established. For one thing with the number of troops we have, we have not been able to get at the foot of this thing.

I think it is most important to see that the credibility of political statements is established.

BLITZER: All right. Let's talk a little bit about the worst- case nightmare scenario. You're outspoken, Ambassador Lodhi, I've obviously known you for some time. Jane's Strategic Weapons Systems estimates, we don't know if this is true, but they estimate India has between 100 and 150 nuclear warheads; Pakistan has between 25 and 50 nuclear warheads.

India says it will not use those first, it will not strike first. Pakistan refuses to make that kind of statement. You're leaving open the option that you might strike first. Why not simply do what the Indians say and avoid this nuclear nightmare and say Pakistan will not use nuclear weapons first?

LODHI: Three quick points. First of all, we have gone much beyond what the Indians are offering. We have said there should be no first use of any kind of force. So we stand by our offer for a non- aggression pact, a no-war pact. So we -- our offer actually goes much beyond what the Indians are saying.

And our doctrine is no different from the U.S. and NATO doctrine, which also do not subscribe to a no-first use.

My second point. I think the presumption here seems to be that somehow if India was to attack Pakistan conventionally, we don't have the means to defend ourselves and it will be a shoo-in or it will be a walk-in by Indian forces.

BLITZER: But they have a much bigger military.

LODHI: I can assure you that Pakistan feels completely confident about its conventional means to deter aggression.

And my final point is that I think, rather than talk about the possibility of a nuclear conflict, we ought not to be engaging in this kind of talk because I think it's dangerous. We ought to be focusing on what we can do to avert a conflict in the first place.

BLITZER: All right.

Ambassador Nambiar, why not do what President Musharraf says? He says he's ready to meet with anybody of authority of the Indian government in Kazakhstan, any place else, any time, any place, to try to ease this tension. Why do you believe that your Prime Minister Vajpayee is not ready to sit down with President Musharraf in Kazakhstan under the auspices of the Russian President Putin?

NAMBIAR: The talk of nuclear -- of resort to nuclear attack, et cetera, has not been raised by India at any stage. I think we have, apart from us, our statement of a non-first use and non-use against non-nuclear weapons states. We have never, during the course of these, the present situation, we have never really talked about needing to any kind of escalation involving the use of weapons of mass destruction.

The question is that it is the leaders of Pakistan who have -- the PR of Pakistan, the president himself, has talked often on about the possible use of nuclear weapons.

BLITZER: Why not have a sit-down meeting between Prime Minister Vajpayee and President Musharraf in Kazakhstan and try to resolve this, lower the temperature?

NAMBIAR: The question is not of whether or not India is prepared to sit down and talk. Of course we are prepared to sit down and talk. But what is the atmosphere that has to be created? Can we afford to sit down and talk when at the same time a proxy war is being held across, involving our own citizens, people are being killed, civilians being killed? The May 14 incident took place. How do you expect the people of India to respond to this kind of attacks?

BLITZER: That's a fair point. We'll get Ambassador Lodhi to respond to it, but we have to take a quick commercial break.

We'll talk more with our guests about concerns about a possible war between India and Pakistan when LATE EDITION continues.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. We're talking about Indian-Pakistani tensions, including the possibility of war, with Vijay Nambiar -- he's India's ambassador to the United Nations -- and Maleeha Lodhi, she's Pakistan's ambassador to the United States.

Ambassador Lodhi, you heard the Indian ambassador make a point, a reasonable point, how can you expect to sit down and have talks in this kind of atmosphere when he says the Pakistani government of President Musharraf is encouraging terrorists to infiltrate and attack Indians in Kashmir?

LODHI: Well, first of all, I must reject that baseless allegation. My president has said that Pakistan soil and territory will not be used by anybody trying to carry out a terrorist attack against any country in the world.

But I have to list the number of no's I have heard not just now, but that we've heard in the present crisis. India says no to talks. India says no to peaceful resolution of this crisis. India says no to placement of any independent monitoring system on the Line of Control. India says no to a meeting in Kazakhstan. What are we supposed to do in this situation?

I think the question that's raised by that is whether India is wrapping itself up in the war against terrorism and using, and I would say using it as a license, to brutalize the Kashmiri people as well as to settle old scores with Pakistan.

BLITZER: Let's let Ambassador Nambiar respond to that.

Go ahead, Ambassador.

NAMBIAR: Well, I can only respond by referring to a survey (ph) which took just recently. It was announced, I think, the last few days. I think the survey took place in April, where in fact 90 percent were, of a sample which was taken which consisted of 60 percent Muslims and 34 percent Hindus, suggested that Pakistani infiltration must end, or Pakistani-sponsored infiltration must end, and that the presence of foreign militants have damaged the cause. And at the same time they've also said -- around 86 percent said that free elections would bring peace.

In fact, if anything, the government has been moving, the government of India has been moving toward that process. And what happens? You have one of the not necessarily pro-Indian leaders who was moving toward the election process, he is assassinated. What kind of a signal is that supposed to send?

BLITZER: Ambassador Lodhi, even President Bush, though, says that President Musharraf must do more. On Thursday, I want you to listen to what President Bush said about the incursions that are apparently still continuing. Listen to this.

(BEGIN VIDEO CLIP)

BUSH: He must stop the incursions across the Line of Control. He must do so. He said he would do so. We and others are making it clear to him that he must live up to his word.

(END VIDEO CLIP)

BLITZER: Is he doing everything possible, President Musharraf, to stop those incursions from Pakistani-controlled Kashmir across the Line of Control into the Indian part of Kashmir?

LODHI: We have responded to the call of the international community, and the president has said that there will be nothing that will go on, and he has already ensured that there is no cross-border infiltration. He said none is going on.

But having said that, it takes two to de-escalate. It takes two to make peace. We have yet to see the Indians reciprocate.

And may I also just respond to what my colleague from New York said. Does it take 700,000 Indian troops occupying a territory to keep Kashmiris happy? What are they doing in there? What have they been doing there for the last 12 years? What have Human Rights Watch, Amnesty International and other reputable organizations been saying about the Indian military presence in a place which is no larger than Belgium? This is the largest armed concentration anywhere in the world.

BLITZER: All right, let's let Ambassador Nambiar respond.

Go ahead, Ambassador. NAMBIAR: The army is actually engaged on the Line of Control and along the border. And I think their major responsibility is to prevent infiltration. True, it has been difficult to prevent infiltration, but the major effort of the army and the security forces is to prevent the kind of abject killing of civilians, which is being perpetrated by the terrorist groups -- the terrorist groups which are receiving support, encouragement and physical organization from across the border.

BLITZER: All right, we're going to just wrap it up. But before I let you go, Ambassador Lodhi, is the Pakistani military moving considerable numbers of troops away from the Afghan border toward Kashmir? Because as you know, this is a source of great concern in the U.S. war against al Qaeda, Taliban, remnants that may have crossed or alongside that border between Pakistan and Afghanistan.

LODHI: As yet, no significant movement has taken place, but of course if the situation continues to worsen, we will have to move more. And in that eventuality, the effort against al Qaeda, which is as important to us as it is to the global coalition, will of course be hampered.

We hope it won't come to that. The border with Afghanistan remains very effectively sealed, even now as I speak. But I think if the situation deteriorates, and I think that's why the international community must act in every possible way to restrain India from trying to follow a military solution.

BLITZER: All right. And Ambassador Lodhi, Ambassador Nambiar in New York, thanks to both of you for joining us. Unfortunately, we are all out of time.

Ambassador Nambiar, welcome to the United States. I know you've only been here for a few weeks. We hope that you'll be a regular guest...

NAMBIAR: Thank you.

BLITZER: ... as Ambassador Lodhi has become over these last several weeks (ph).

BLITZER: When we return, inside the new FBI, is the crime- fighting agency up to the job of counterterrorism? We'll talk with Oklahoma Governor, the former FBI agent, Frank Keating, and former Deputy Attorney General Eric Holder.

LATE EDITION will be right back.

(COMMERCIAL BREAK) (BEGIN VIDEO CLIP)

MUELLER: Our analytical capability is not where it should be. Our analysts are working harder than ever, and they need help.

(END VIDEO CLIP)

BLITZER: The FBI director, Robert Mueller, acknowledging that his agency is not yet up to the task of analyzing what could be crucial intelligence information.

Welcome back the LATE EDITION.

Joining us now for some perspective on the challenges facing the FBI are two guests with insight, special insight: Republican Governor Frank Keating, he's a former FBI special agent, he's the governor of Oklahoma. And Eric Holder, he served as the deputy attorney general during the Clinton administration.

Gentlemen, welcome back to LATE EDITION.

And, Eric Holder, let me begin with you. The FBI, in their new priorities -- and we'll put the top five they put out there this past week, Director Mueller.

Number one, protect the United States from terrorist attack. And lot of Americans are probably wondering, what took so long to make that priority number one?

ERIC HOLDER, FORMER DEPUTY ATTORNEY GENERAL: Well, I mean, I think, you know, the FBI has had, traditionally, over the years, a vast number of responsibilities. And until the '90s, I guess we didn't have to worry about terrorism in the way that we now have to. And certainly after September the 11th, our attention has been focused on terrorism in a way that it has not been previously.

I think what they have said there in going through those five priorities makes sense, given the changed circumstances that we now face.

BLITZER: Obviously, people saying what happened during the eight years of the Clinton administration? Well, you were the number-two official at the Justice Department, were people asleep at the switch?

HOLDER: No, not at all. We spent a significant amount of time on terrorism and deterred a number of terrorist attacks. People tend to forget what we did in connection with the millennium plot that we thwarted or all the work done in the Southern District of New York by very able FBI agents and assistant United States attorneys in prosecuting people who were responsible for the World Trade Center bombings, the bombings of our embassies in East Africa.

It was a priority for us in the Clinton administration. Now, you know, looking back, there are certain things, perhaps, we could have done differently, as I'm sure this administration will look back, when it has time to reflect, that it might have done differently. But I think, overall, we did, you know, a pretty good job.

BLITZER: Governor Keating, you have a unique perspective. As a governor, a former FBI special agent, someone who's worked here in Washington, out in the field, and you, of course, were governor during the Oklahoma City bombing.

Are we making a mistake, looking back and trying to see what the mistakes were, why these so-called dots were not connected? Is it time now for that kind of look back?

GOV. FRANK KEATING (R), OKLAHOMA: Well, I think if you don't read history, you're someday going to be forced to re-live it. And we should look back and find out what exactly went wrong.

I think the attorney general and the director ought to be commended because, to attack the culture in Washington and say decisions should be made below, we ought to get out of the drug business or at least a lot out of the drug business -- the DEA does a great job with anti-narcotics and counternarcotics initiatives -- and we ought to seek to prevent crime, a terrorist incident, as opposed to investigate it after the fact.

When I was an agent -- between the time I was U.S. attorney and an agent, the government, both Democrats and Republicans, moved the FBI away from the prevention business. It was considered a violation of the First Amendment to investigate groups and organizations...

BLITZER: Because of all of the abuses in the '50s and '60s.

KEATING: That's correct. But the reality is the FBI pulverized the Ku Klux Klan. The FBI pulverized the American Communist Party, basically, made them eunuchs. As a result, a very discreet, a very appropriate, sensitive investigation to protect the homeland. I think what they're doing now with the watchful eye of courts and the Congress is absolutely right.

BLITZER: But is this a job that the FBI is up to, preventing terrorism? Because as you know, it was always going after the gangsters, the drug dealers, the crooks, and bringing them to some sort of trial, as opposed to preventing. Maybe there should be another agency that's set up to deal with fighting terrorism.

KEATING: I think as a follow-on to what Eric said, and he's absolutely right, what you see now as a result of circumstances that didn't exist, let's say, 10 years ago, what you see now is a focus. Finally, we have a focus. What you see now is bringing together the CIA and the FBI for daily briefings with the president. What you see now is forced analysis together, forced sharing in intelligence together.

But all the state and local law enforcement, all of us in the country, to be protected against an act of terrorism, have to have the FBI and CIA working together and have to have some federal agency out there preventing crime, rather than investigating it after the fact.

BLITZER: I interviewed Seymour Hersch. He's got a new piece in The New Yorker, the investigative journalist. He says, based on his reporting, it's going to take at least four or five years to move the FBI where it's supposed to be in this war against terrorism. It's sort of like an aircraft carrier, it takes a long time to make an adjustment.

Is that -- you believe the FBI can make that adjustment, and can they do it quickly?

HOLDER: Well, I think the bureau is capable of making that change a lot faster than four or five years. I think a lot of the pieces are in place. It's really just a question of putting those pieces in the appropriate places and having the appropriate people direct it.

HOLDER: But I also think the focus on the FBI is a little misguided here. We're putting a little too much emphasis, I think, on the FBI. It's not only the Bureau that has to operate appropriately, it has to be the CIA, the NSA, the Defense intelligence agencies, as well as other agencies that have a piece of the pie here.

BLITZER: INS.

HOLDER: FAA, all of these places have to be talking to one another, sharing information, and then responding to information that is presented to them.

BLITZER: But you know the bureaucracy, you're a former U.S. attorney. You know the Justice Department, obviously. You know how it works. Can these agencies, which are competing and they're sort of rivals amongst each other, can they get together and cooperate to the degree they need to?

HOLDER: I think they can, and if they don't, heads should roll.

We're dealing with a different world now. Everybody should remember those pictures that we saw on September the 11th. The World Trade Centers aflame, the pictures of the Pentagon, and any time some petty bureaucrat decides that his or her little piece of turf is being invaded, get rid of that person. Those are the kinds of things we have to do.

We have a person, now, who is in charge -- has this responsibility, Governor Ridge. It seems to me that he needs to be empowered, he needs to be given the ability to tell Cabinet agency heads that maybe they're not moving as fast as they need to.

BLITZER: You know -- he's a fellow governor, a former governor of Pennsylvania. You know him quite well. There's been a lot of concern, though, that he hasn't been given the authority to do the job that the president initially said he would do.

KEATING: Well, the best analogy is the drug czar. When Bill Bennett was the drug czar, the president had a focus on drugs, empowered Bill Bennett. I was the, quote, drug czar as the associate AG here, bringing together the supply -- or on the supply side. The demand side had another drug czar. And we worked well together, all the various agencies, because the attorney general had one mission, the president had one mission.

The problem here is the president has a war overseas, as well as a threatened war domestically, and Tom Ridge obviously is only as strong as the president.

I happen to think he ought to have more authority, ought to be able to knock heads together and make things happen. He ought to have some budget authority and certainly some line authority, but that's something that has to be debated, discussed here in Washington, and the only resolution will have to come here.

BLITZER: You agree with that?

HOLDER: Absolutely. And I think the phrase that the governor uses is exactly appropriate. He has to have the ability to knock heads. It's not going to be easy, these are people with great egos who have great institutional histories behind them, these Cabinet heads. And it seems to me that he has to be empowered to tell these folks, "This is what you're going to have to do," and he's got to be backed up by the president.

BLITZER: Governor Keating, listen to what Senator Specter said on Thursday. He's a Republican from Pennsylvania, and he's concerned about some of these changes, but let's listen to this.

(BEGIN VIDEO CLIP)

SEN. ARLEN SPECTER (R), PENNSYLVANIA: There's no doubt there needs to be a reorganization. More than a reorganization, there needs to be a change of attitude. There has been identified the culture of concealment, where the FBI has not shared information with the CIA. We've got to break down those barriers.

(END VIDEO CLIP)

BLITZER: To a certain degree, they are being broken down. There's joint meetings, joint briefings, but it's going to take a long time.

KEATING: Well, we defeated the Germans and the Japanese in four years. The Manhattan Project took a number of months.

This is a critical threat, the critical threat to the security of the United States. The economy, two-thirds of it is consumer confidence. We can't afford to lose other lives. We better make it all happen. Otherwise the country at large will be diminished and very definitely adversely impacted. And as Eric said, a lot of heads will roll if we make another mistake.

BLITZER: All right, stand by. We're going to take a quick break. We have a lot more to talk about.

We'll also be taking phone calls for Governor Keating and the former Deputy Attorney General Eric Holder. Stay with us.

(COMMERCIAL BREAK) BLITZER: Welcome back to LATE EDITION. We're getting some insight into the new FBI with the Oklahoma governor, the former FBI special agent, Frank Keating, and former Deputy Attorney General Eric Holder.

The biggest problem, as far as you can tell, in the war on terrorism right now is what?

HOLDER: That's kind of hard to say. I would think that just kind of getting agencies to act in a way that they are not used to acting is probably the biggest problem, getting people to share information, putting the mechanisms in place that force that to happen.

I think that's going to take some time. Not a huge amount of time. Not years. It ought to take a matter of months, I would think. I think that's probably the biggest problem.

BLITZER: Changing the culture, the cooperation -- Senator Charles Grassley, Republican of Iowa, said this on Tuesday, Governor. Listen to what he said.

(BEGIN VIDEO CLIP)

GRASSLEY: Bin Laden and the international terrorists are not Bonnie and Clyde. And we have to change the mental attitude in Washington, D.C.

(END VIDEO CLIP)

BLITZER: Now, as he said that, coming on the heels now of this new Newsweek report saying that two of the 19 hijackers were actually being followed for months, if not a couple years, by the CIA, that they had warnings, that one of them had been implicated in the attack on the USS Cole in Yemen.

Yet this individual was getting visas, multiple entry visas in Jeddah, Saudi Arabia, to come to the United States. And until August of last year, no one from the CIA bothered to notify anyone else at the FBI, let alone INS, the Immigration and Naturalization Service, or the State Department, or other agencies of the U.S. government that these individuals should be on a watch list.

KEATING: Well, at first blush, I would say that is reckless and negligent and destructive of innocent human life -- potentially destructive of innocent human life.

Remember, the State Department here issued these visas, and these people came in -- Mohammad Atta, for example, was accepted for a visa, he received his visa, came to the United States before he was even accepted into the school to which he later was supposed to attend.

The same thing with a number of these people. They were out of status, nobody had any idea where they were, they couldn't track them down. And yet, after 1993, when al Qaeda -- when the World Trade Center was first bombed, we still were letting these people into the country, in and out of the country. The negligence of that is mind-boggling. I just can't imagine that we didn't, immediately after 1993, address our enemies and not let them in the country.

BLITZER: Well, you were deputy attorney general for part of that period.

HOLDER: Yes. Sure, and no question, those are legitimate questions, and we ought to, I think, ask a broad series of questions about a whole host of institutions: the Clinton administration, the Bush administration, the investigative agencies.

If all these hearings that we're about to begin are going to make sense, we're going to have to ask really tough questions, and these have to be broad-based.

And that's why I said earlier, you can't focus strictly on the FBI. You've got to put people in the dock who were responsible, including myself, the attorney general, the former president, and really ask tough questions of all these people.

BLITZER: And, in fairness, everybody is a lot smarter with hindsight, knowing what has happened since then. So I guess you can't beat yourself up totally. Although you do beat yourself up to a certain degree.

HOLDER: Sure.

BLITZER: You probably are wondering, asking yourself all the time, "Maybe we should have followed up on this, maybe we should have done that."

HOLDER: I mean, it's something that haunts me. I mean, is there something that we could have done? Is there something we might have been able to do that might have prevented September the 11th? Anybody who was responsible and who cares about this nation and who witnessed what we saw on September 11 has to ask themselves those kinds of questions.

BLITZER: Those are powerful words, that it does haunt you?

HOLDER: Sure, absolutely. I mean, you wonder about whether, was there something that we could have done, something that I could have done as deputy attorney general, and of course...

BLITZER: Is there one specific instance that you look back and say to yourself, I wish I would have followed up on this or that?

HOLDER: No, there's nothing that I've really come up with. And yet I wonder, as every new report comes in -- I mean, I've been looking at this Newsweek story and wondering, is there something there that passed through my desk, passed through my office, or something through the Justice Department more broadly, that, if I had pushed, if the attorney general had pushed, that we might have been able to change something that happened on September 11.

KEATING: Wolf, bring it to today. Is it or is it not true that last week, during Memorial Day weekend, the INS was not available to identify and assist the New York police in apprehending, or at least keeping in custody, people who looked very suspicious as a result of what appeared to be forged documents? They were told, allegedly, to let these guys go.

I mean, that's the kind of thing that simply cannot occur, cannot be permitted to recur. And I would hope that there is a thorough analysis of that conduct and a commitment that that kind of thing will not recur. That shows people are not talking to each other even now.

BLITZER: And officials of the INS say, well, they're stretched too thin, they don't have the manpower to check up on all these individuals...

KEATING: Well...

BLITZER: ... which is -- that's obviously not a good answer.

KEATING: No, it's not a good answer at all. We cannot afford another one of these incidents.

And when something like that happens, you know, we're not talking about the Mexican immigrants, we're talking about potentially al Qaeda, very darkly suspicious people. And the police felt that there was enough there to call the INS, and allegedly the INS said that -- I guess they didn't answer the phone, they were in Vermont or something.

I mean, that is crazy, if that in fact has occurred.

BLITZER: All right. Let's take a caller, we have a caller.

Go ahead with your question, please.

CALLER: Yes, my question is to both guests. Whether politicians in the '80s and '90s perhaps stretched the FBI too thin by federalizing crimes that should be handled locally -- crimes like carjacking, church burning, et cetera.

BLITZER: What about that, former deputy attorney general?

HOLDER: Well, I think that's a good observation. We put too much on the FBI. The FBI, I think, ought to have a core mission, a number of things, I think, beyond terrorism, though -- may that be the primary mission, but I think the FBI has got to be responsible other things as well. Certainly, the fight against organized crime has got to continue. It plays a unique role in political corruption cases.

But I think we did heap on the FBI too many things during the course of the '80s.

BLITZER: Governor?

KEATING: Well, to the extent that we have crimes that could be locally investigated, narcotics offenses for example, a very good example, that, yes. I mean, the reality is, the Bureau, when I was an agent, there were 7000 agents, now there are 11,000 agents. There are a lot of statutes that Bureau investigates, but they need to prioritize and identify this threat from terrorism.

Militant Islam is the number-one threat to the security of the United States, and we ought to have the resources applied accordingly.

BLITZER: Are your law enforcement agencies in Oklahoma, state and local, getting the help, getting the information from Washington, from the federal agencies that you need? Because in Oklahoma, there are flight training academies, other places where supposedly some of these terrorists were studying as well.

KEATING: Well, as a matter of fact, in 1988, according to Steve Emerson's book, there was a Hamas conference, convention, nearly a thousand people in Oklahoma City, and the FBI had no knowledge of it, had no interest in it because of the nature of their unwillingness, inability, legally, to examine activities like that.

The fact is, state and local law enforcement know nothing unless the federals give them information. What we have to do in this country is have states amend their public meetings laws and their -- and other laws that affect the distribution, the sharing of that information, so that the FBI and other agencies will. Many states are doing that.

The FBI, at least in my state, is doing an excellent job of sharing information.

BLITZER: The balancing act, though, between civil liberties and fighting terror is a tough one to walk, to deal with. Are you concerned at all that Americans' civil liberties are going to be undermined as part of this new mission of the FBI?

HOLDER: Yes, I am a little concerned about that. I think we can't forget history. I think we have a lot of well-intentioned FBI agents out there, and yet we can't forget what happened in the '60s and the '70s that led to the reforms -- what were considered reforms that we're now in the process of rolling back.

I'm concerned that we're going a little too far in trying to make adjustments here. Clearly, we have to make adjustments in light of what happened on September the 11th. But we don't want to go back, it seems to me, to the days -- or to the standards, that we had that led to the abuses of the '60s and '70s.

It seems to me that in order for our agents to do what we expect them to do, there need to be some kind of standards. And I'm not at all certain, looking at what I've read over the past week or so, that we have some kind of articulable standards that agents in the field are going to be able to follow.

BLITZER: Eric Holder, thanks for joining us.

Governor Keating, thanks for joining us. I know you're winding up your second term. You'll be leaving office in January. Good look, and hope you'll be back on this program.

KEATING: Thank you. Appreciate it.

BLITZER: All of us remember the great work you did after Oklahoma City.

KEATING: Thank you.

BLITZER: Thank you very much.

And just ahead, a golden jubilee as Britain celebrates 50 years of Queen Elizabeth II on the throne. We'll talk about her impact on her country and the monarchy. LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION.

This is Jubilee Week in Great Britain, where a number of celebrations are being held to mark Queen Elizabeth's 50th year on the throne. Britain has undergone profound changes since Elizabeth's cessation in 1952.

Joining us from Buckingham Palace with some perspective is Robert Lacey. He's a royal biographer and author of the new book, "Monarch: The Life and Reign of Elizabeth II. Also at Buckingham Palace, CNN's own Richard Quest.

Gentlemen, welcome to LATE EDITION.

Robert Lacey, first to you, how has the monarchy changed over these 50 years?

ROBERT LACEY, ROYAL BIOGRAPHER: Well, it's had to reflect, obviously, the disappearance of deference from British society. Kids no longer quake in the street when a policeman tells them off. School masters are questioned. We regularly see medical scandals. The medical profession is not respected.

And of course, this has been a challenge toward the monarchy, as well. Some would say they'd never expect to see Buckingham Palace the scene of a pop concert, with Ozzy Ozbourne playing for the queen.

Some would say maybe the queen has gone a step too far. We're going to have 50 Hells Angels, one for each year of the queen's reign, coming down the (UNINTELLIGIBLE).

(LAUGHTER)

But the opinion polls this morning show higher ratings for the queen than ever.

BLITZER: What about that, Richard Quest? I know you haven't been around for 50 years, but give us your sense how this monarchy has changed. RICHARD QUEST, CNN CORRESPONDENT: Wolf, one has to only see what's happened in the past 24 hours to realize there has been a dramatic shift, to some extent. We better qualify that. "Dramatic," in terms of royalty, is glacial, and everybody else -- you would you agree with that, Robert. Last night, after the concert, the queen, along with the Duke of Edingburgh and all the performers, actually came outside the palace. There were thousands of people outside. She came out and did a wave.

Now, the mere fact that the queen was acknowledging the tens of thousand outside the palace gates, that might not seem terribly significant in a society where the president plunges in to work the front line and shake the hands. But in royal terms, the fact the queen was able to do that, I think starting to show great significance and great change.

LACEY: Yes. And the other big change, of course, was -- well, the big news on all the papers this morning was Camilla and the queen in the same picture. They were there in the palace last night. We knew that Camilla was coming into the royal box. Everybody thought she would be at the back.

(LAUGHTER)

Well, she was sort at the back, but somehow, when the photographers framed up, there was the queen on one side and Camilla on the other. And that really is the big story in the press today.

BLITZER: And, Richard Quest, for those one or two of our viewers who don't know who Camilla is, describe -- tell us how she is referred to by the monarchy over there.

QUEST: Well, Camilla Parker-Bowles is best described as Prince Charles' special friend, his girlfriend, his partner, and there's all sorts of sobriquets that one can use.

The one thing we can say this, and this comes from the prince of Wales himself, is that his relationship with Ms. Parker-Bowles is non- negotiable. And by that, he's thrown the gauntlet. I think that's not putting it too strong. I think that's not putting it too strong. He's thrown the gauntlet.

Now his grandmother, the Queen Mother, has passed on. He's thrown the gauntlet to the royal household in saying Camilla Parker- Bowles is with me. She will be with me. We may or may not marry at some point in the future, but she's going to be there.

LACEY: And it represents really quite a victory for Prince Charles. I mean, there are two ways of looking at what's been happening over the last couple of years. The press here like to make much of his spin doctors who've been presenting Camilla and it's presented in a very sinister way.

Now Prince Charles' own people would say, well, for the first time, perhaps, in his life, he's being honest about this relationship and the public is seeing more and more. To start with, of course, his mother resisted this, because of her special position in the church. But I think, well, I think it was a clear victory for him.

I think it also shows, perhaps, for the future a new partnership between the queen and Prince Charles that we're going to see, especially since now she said she's going to go on and on, Wolf. But we do know that more duties will be transferred to Prince Charles.

QUEST: Yes. When she recently said in her Jubilee address to both houses of Parliament, she was going to go on, she said, "with the support of my family."

BLITZER: The death of Princess Diana, how has that affected, if at all, this Jubilee week that all of are you about to celebrate?

Richard, why don't you try that?

LACEY: Well, we can see one change straight away, that the Union Jack up over Buckingham Palace now, that never flew, until after the death of Diana, when you remember the great controversy, should there be a Union Jack over Buckingham Palace, in this case, at half-mast?

I think we probably, I would argue, wouldn't be seeing the pop concert in the palace tonight if it hadn't been for Diana.

Because this very moment we're looking at, when we saw for the first time in that difficult week for the royal family, the royal family showing emotion has really set the key for everything that's happened since, wouldn't you say?

QUEST: Oh, absolutely. I mean, again, qualified emotion.

(LAUGHTER)

I mean, we're not talking about gnashing and wailing (ph) of teeth here.

But you know, Wolf, I'm afraid you've probably got two of the wrong people here to be questioning...

(LAUGHTER)

... because once you start either of us off on the royal family, you're probably going to get more than you bargained for, since I think we could wax political on this subject for hours.

BLITZER: What about the role of the media, Robert, in all of this, especially the very, very lively media, the print media in Britain?

LACEY: Well, they're doing, you know -- they're playing their normal role. They're bringing out the supplements. They are, on the one hand, saying, you know, surely that royal family should be out of date in their editorial columns and then devoting acres of news print to it.

I think the other significant thing is the way in which the palace has handled the media. Again, that's a big contrast from Diana's time. We've had endless presentations over here in the palace.

QUEST: They got better at it.

LACEY: Yes.

QUEST: I mean, we've had press conferences actually not shunted to one side of the annex but in the main reception rooms of the palace. They've actually let the wolves in the front door, and given us a cup of tea and a biscuit at the end of it all.

(LAUGHTER)

LACEY: And even the queen had all the rats, as they're generally referred to, out to Windsor Castle to entertain us all, 600 or so of the media. And what was interesting was some of the most luridly anti-monarchist editors were only too pleased to sidle up to the queen.

QUEST: What will be fascinating is when the next scandal, when the next really important scandal -- we nearly had it with Prince Harry, with the drinking and drug-taking incidents -- when we get a really big scandal, will the press and the media turn on the royal family as they did after Diana and they have on several occasions?

At the moment, the media and the press is with the queen. The surveys are showing she's very popular at the moment. But you know, it's probably a mile wide and an inch thick.

BLITZER: Well...

LACEY: Yes. I mean, recently for example, there was quite controversial news released -- sorry?

BLITZER: I was going to say we're all out of time, unfortunately. Save that controversial news for another occasion. We're going to be talking a lot in the coming week, obviously, about this.

I want to thank Richard Quest, Robert Lacey, two of the best in the business, know a lot about this.

I guess, is it appropriate for all of us outside to say God bless the queen?

LACEY: Yes, absolutely.

BLITZER: God bless the queen.

Thanks so much for joining us, Robert Lacey and Richard Quest.

When we return, Bruce Morton's essay.

(COMMERCIAL BREAK)

BLITZER: Bruce Morton shares some thoughts on the mounting gray areas in the war against terrorism. (BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT (voice-over): The last stretcher, symbolizing the victims who were not found, has been carried away. Ground Zero is at rest, but the world of course has changed and moved on.

President Bush had probably his finest week as president after the attacks, reassuring a worried country, outlining a war, a mission.

BUSH: War has been waged against us by stealth and deceit and murder. This nation is peaceful but fierce when stirred to anger.

MORTON: But in the months since, the war has become more complicated. Pakistan is America's ally in the war against terror, sure, but al Qaeda people are in Pakistan doing terror. The bomb, May 8, that killed 11 French technicians, for instance.

And Mr. Bush must now try to talk his ally out of a war with India, which Pakistan, unless it uses nukes, probably can't win.

In Europe, President Bush was criticized for everything from snapping at a reporter who spoke French to the president of France...

BUSH: That's very good. The guy memorizes four words, and he plays like he's intercontinental.

MORTON: ... to going his own way on terror-related issues, like when and how and whether to invade Iraq.

And then the Pentagon weighed in, telling The Washington Post that an invasion of Iraq might cost a lot of American lives.

They have a point. Look at the map, look at the countries around Iraq. When the first President Bush drove Saddam Hussein's troops out of Kuwait, the U.S. had allies in the region.

Now, not Iran, though it fought a war against Iraq. Not Saudi Arabia. And while any Iraqis might wish to be rid of Saddam, would they welcome an American army in their country in his place? Not likely.

Years after the Vietnam War, then secretary of defense Robert McNamara was among a group of Americans who went to Vietnam to talk about the war with Vietnamese who'd been in their government then. He was amazed, McNamara said, at the high casualties they took. Well, the Vietnamese reminded him, it was our country, of course we would fight very hard to keep it. Iraqis probably feel the same way.

(on camera): So the world continues to change. Firm stands which came easily just after the attacks seem murkier now. Polls show fewer and fewer Americans think the United States is winning the war on terror. They don't think terrorists are winning it either. They don't think anybody is.

I'm Bruce Morton. (END VIDEOTAPE)

BLITZER: Thank you very much, Bruce.

It's time now to say good-bye to our international viewers.

For our North American audience, as New York tries to heal, we'll get some reflections from the city's former mayor, Rudy Giuliani, and the former police commissioner, Bernard Kerik.

LATE EDITION will be right back.

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: This morning there was another memorial service at Ground Zero in New York. It was held to accommodate those family members who could not attend the service on Thursday designed to mark the formal end of the recovery effort at the site of the World Trade Center.

That day I had a chance to speak with the man who lead New York during its darkest hours, the former mayor, Rudy Giuliani.

(BEGIN VIDEOTAPE)

BLITZER: Mr. Mayor, thanks so much for joining us on this important day in the history of New York City.

Did it take as long as you thought it would take, this recovery effort?

RUDY GIULIANI, FORMER MAYOR OF NEW YORK CITY: Oh, this happened -- this whole recovery effort happened much, much faster than I would have anticipated on the evening of September 11 and the morning of September 12 when it went through it's first, you know, first overnight phase. And we had to organize it very, very quickly.

BLITZER: How long did you think it would take at that point?

GIULIANI: I would not have been surprised if it took over a year when we assessed it on the evening of September 11 and we took a look at the six or seven stories of fallen building, and the fires at 2,000, 2,500 degrees Fahrenheit and realized how dangerous it was. And I think we thought it would be about a year, maybe longer, to actually get to the point they're at right now.

So, the work that's been done, the way it was organized, the heroism of the work, the skill, the professionalism is just absolutely remarkable. It has to at least help, in some ways, to restore your spirit about what a people who live in freedom can accomplish when they just focus.

BLITZER: The people who worked there felt they had a mission. It wasn't just a job. They were so deeply committed. GIULIANI: You're absolutely right, Wolf. That is exactly why this happened as quickly and as effectively and as safely as it did. The people working there felt a patriotic, religious commitment to doing this that was beyond anything I'd ever seen before -- both the people that were actually working on it and then all those people who would stand by and encourage them when they went to work or left work. I mean, it was just an amazing thing. It helped to unify the people of New York and the people of America.

BLITZER: Now, when you speak about safety, it was a dangerous site to begin with. It's almost a miracle that more people weren't injured as a result of the clean-up, the recovery and rescue effort.

GIULIANI: In the first two months, in particular, that worried me greatly. I mean, it used to keep me up at nights, thinking about, are we pushing too fast, are we pushing too hard? Are we -- and therefore risking the lives of other people that were working there, particularly as it went from the phase where we had to accept the reality that we weren't going to save anyone and that we were searching for human bodies and human remains? As we went through that transition, it worried me greatly that maybe we were going too fast and we were going to hurt some people.

But they handled it so professionally, they handled it so bravely. And I realized just in talking to them that, even if I tried to stop them or slow them down, they wouldn't have listened to me, they would have just gone right straight ahead and done what they had to do.

So, I'm very, very thankful that it turned out the way it did and we did not have any further fatalities.

But believe me, in those first two months, people that were down there, every single one of them, was in a volatile situation and was at risk, because nobody could predict what was going to happen with those fires or what was going to happen with those structures when they were still all hanging out there.

BLITZER: And as incredibly sad as those first days, those first weeks were, what was even sadder was the empty hospital beds at all the New York City hospitals, awaiting some of those survivors, survivors who never showed up. I remember seeing rows and rows of hospital beds. You guys were ready for it, but they just weren't there.

GIULIANI: We spent a lot of the day on September 11 organizing the hospitals so that we could do triage, so that we could -- so that we could have the hospital beds near the World Trade Center empty by moving people out, or at least enough of them.

And then -- I don't think I can describe to you the horrible feeling as the realization set in on the 12th as I visited some of the hospitals. And I remember at St. Vincent's Hospital, Mark Ackerman (ph), who's the director at St. Vincent's Hospital, who had -- they had done terrific efforts on September 11. And I remember early -- late morning or early afternoon of the 12th, he looked at me and he said, "We're not getting any people." And I understood immediately what he meant by that. So then I went down to -- went down to Ground Zero to check with a fire department or EMS and they said to me, "We're not having any success taking anybody out."

It still took a while to accept that, but that was the first time that I focused on the fact that everything we had organized to save people, that we were not going to have tremendous success in doing that. It was a horrible feeling.

BLITZER: What do you do with this World Trade Center site now? As you know, Pearl Harbor, there's been a comparison made to Pearl Harbor. Pearl Harbor, there's a memorial there in Hawaii, but there's also a working port that has continued to function there. Is that a parallel, a precedent, a model that perhaps should be used for the World Trade Center site?

GIULIANI: I think we have to think memorial. This is not as big an area as Pearl Harbor, it's a more confined area. This is a burial ground for thousands of people. And I think what we have to think is memorial, and let that dominate the planning. And then any commerce or any commercial development would be secondary to that, rather than the primary focus.

Here's the way I look at it, Wolf, and I have for quite some time. A hundred years from now people are going to come to that site, and they're going to be at the site, hopefully, of the worst attack on America, because hopefully we won't have a worse one. And also they'll be at the site of some of the greatest examples of bravery in the history of America. It has to be hallowed ground, it has to be a memorial, a library, a museum, so that 100 years from now people don't say of us that we just covered over the place, and that we understood and honored what happened there.

And if we accomplish that correctly -- a beautiful, soaring, dramatic memorial, aesthetic and beautiful, and a library and a museum that relives the experience of the day and places it in the historical sequence -- then, with whatever is left, you can make a decision about commerce. But commerce shouldn't drive this decision. Memorial should be the focus of it.

BLITZER: What about the environment? How safe is it down there at that site?

GIULIANI: You know, I don't know. I'm not an expert. All the tests that I've seen, both when I was the mayor and thereafter, say that it's safe and that people can live there and people can go there and people can work there. And I certainly suspect that that's the case right now.

I remember in the first couple of weeks, even beyond the first couple of weeks, in the first three or four months, there was smoke coming out of there. There would be days in November and December in which the smoke was almost as bad as it was back in September. But for the last three or four months that has not been the case, so I think conditions there right now are safe. And -- but again, it would have to be experts that could really, really tell people that. BLITZER: Mr. Mayor, how frustrated are you, how angry are you that Osama bin Laden, if he's alive right now, remains at large?

GIULIANI: Well, I'm very angry about the attack. Really angry. And I don't let myself kind of hide that away. Whenever I go there, it's almost my first feeling of this tremendous anger that these people attacked us.

I think the idea of eliminating the possibility of their being able to do this to us again is a matter of self-defense, including, you know, finding him. And I'm sure that's very much the focus of our government right now.

I think our government has been very patient, and I think they're very deliberate, and I think we've accomplished a great deal in the last nine months. But like everyone else, I think I'm very, very hopeful that we're going to be able to do something about him.

BLITZER: What goes through your mind, Mr. Mayor, when you hear the FBI director, Robert Mueller, suggest that, yes, the FBI could've done a better job connecting the dots before September 11?

GIULIANI: I guess I'm like, maybe, some other people, the way I react to that. I was in that business for a very long time, you know, law enforcement, longer than I was in politics. I see that as a hopeful thing. I see that as a commitment that they're going to do everything they can to make sure that this doesn't happen again. They're going to learn from this, they're going to build from this. They're going to overemphasize, you know, gathering intelligence, sharing intelligence.

And assessing whether they should have known or not is very, very difficult because at the time in which that information crossed their desk -- whoever they are, right -- they didn't have the gift of prophecy. That gift only comes about after September 11. And now you look back on these things that maybe didn't make as much sense then, and all of a sudden they jump out at you.

So I don't -- that, I think, is very, very difficult and sensitive to assess. But to say that they should've known, they should've picked it up, that there -- and that we should not let this happen to us again, and have a really strong and aggressive spirit about that, that's exactly the right thing we want. That makes us safer.

BLITZER: Should anyone be held accountable?

GIULIANI: I don't know. I don't know the answer to that. It really depends on a very careful, judicious and sensitive analysis of, being honest and being fair, how apparent was it back then, before September 11. Because it's real easy now that it's taken place to go back and say, "Oh, look at that piece of information. They should've figured that out; they should've figured this out."

This is going to need careful, dispassionate, apolitical analysis to really figure out, are there people that are accountable or not? I don't know the answer to that.

The other part of it, I think, is much easier to do and maybe more important, which is, going forward, we've got to do everything we can to make sure that we don't, you know, lose focus, you know, we do everything we can to pick up things like this in the future.

BLITZER: Mr. Mayor, I want to wish you good luck to you, good health to you.

GIULIANI: Thank you.

BLITZER: I hope your health is doing just fine.

GIULIANI: My health is doing fine. Thank you very much for asking. I hope to see you soon.

BLITZER: How do you feel about James Woods playing you in a motion picture?

(LAUGHTER)

GIULIANI: Well, I always thought if they ever played me in the movie they'd use that old actor, Bela Lugosi, so this has got to be an improvement.

BLITZER: He's a great actor.

GIULIANI: He is a great actor, and I've enjoyed his movies very, very much. I don't know -- it's really uncomfortable when you think about somebody playing you, though.

BLITZER: Yes.

(CROSSTALK)

BLITZER: All right, Mr. Mayor, thanks as usual. Good luck to you.

GIULIANI: Thank you.

(END VIDEOTAPE)

BLITZER: And there's a developing story outside of Buckingham Palace. Let's go back to London. That is where CNN's Richard Quest is standing by with details -- Richard.

QUEST: Wolf, at the moment, we're just watching an ambulance going into Buckhingham Palace because we are getting reports that a fire has broken out in the palace.

Now, we don't know any more than that. We don't know where the fire is, how serious it is, what the cause of the fire was, or indeed it is has even been put out. But we do know that in the last five, 10 minutes we've seen four or five very large London fire engines entering the palace through the front gates. They came up Constitution Hill, around the Victoria Monument and through the front gate. They then went through the central arch of the palace.

Now, that suggests -- and it's speculation, Wolf -- but that suggests that's what's happening in the palace is within that courtyard or in the palace proper, because that courtyard is the central area leading to all the official and formal parts of the palace. If it had been maybe the Queen's Gallery or other parts of the palace, I would have expected the fire engines either go up to the right or to the left, but they didn't. They went through the central part.

Now, the extent -- I mean, let's be blunt, we don't know whether this is just simply a minor catering accident, or whether something more serious. We've been scouring and looking at the palace trying to see signs of smoke. We think we can see a bit of haze in the corner. But that is just speculation.

We do know fire at Buckingham Palace, four or five fire engines have gone in, and they've just joined by one ambulance. And obviously, as and when we get any more details -- and we're working that very hard at the moment -- we'll come back to you, Wolf.

BLITZER: All right, Richard Quest is our man on the scene. We'll be back to you the moment you have some additional information to inform our viewers. Richard Quest, outside of Buckingham Palace, where there is a fire, and we'll get details as they become available.

When we return, as focus of Ground Zero in New York shifts to rebuilding, we'll talk live with the former New York police commissioner Bernard Kerik, about the after-effects of September 11 on the city and the efforts to move on.

LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: A solemn tolling of the bell at Thursday's Ground Zero ceremony in memory of those who perished on September 11.

Welcome back to LATE EDITION.

We're joined now by someone who spent countless hours and days helping New York City gets it bearings back after the attacks, the former police commissioner, Bernard Kerik.

Commissioner, thanks so much for joining us.

BERNARD KERIK, FORMER NEW YORK POLICE COMMISSIONER: Thank you.

BLITZER: And I want to show you and our viewers around the world two pictures. First of all, a picture of Ground Zero immediately after September 11. Let's show our viewers what it looked like, the devastation then, if we could put that up on the screen.

This is the image, of course, that all of us will remember, etched in our minds. You were there for countless hours, as I said, looking at these workers just begin the difficult, enormous ordeal that they faced. These are pictures of September 13.

Now take a look today. Look at this same site, what it looks like right now. It's almost a miracle. It's amazing.

What goes through your mind, Commissioner, when you look at those two images?

KERIK: I think what goes through my mind is the dedication and the perseverance of the people that were down there for the last eight or nine months. These people worked tirelessly. They were dedicated.

A number of them, as the mayor said earlier, you just can't imagine the dedication they had. I had to force people to leave the area, late evening hours. The first deputy commissioner of the police department, I had to order him to go home.

Cops from the emergency service unit and fire department members, they would be down there for 12 hours and then they would get off duty and stay off duty, continuing the recovery effort. The construction workers. When I look at it today, I just think of what an enormous job they really did. BLITZER: How concerned were you about the physical safety of not only the police officers, but all the other workers who just -- most of them, of course, volunteered for that critically important work?

KERIK: Well, I think you may remember, at some point in time, we had to stop the volunteers from coming in, for a number of reasons, but primarily for safety. We wanted to make sure that we could have an accountability of who was down there, how they were operating. We needed to make sure that they were being supervised and that people were going to get out of there, safe and secure.

Within that first four to six weeks, buildings were shifting, debris was still moving. And I can recall a number of nights that the mayor and I would go down there, when they were on the piles of rubble and one of the buildings would start to move. There would be a mass exit, and people would run, thinking that something was going to shift and fall. So it was always a concern of safety being first.

BLITZER: How much has the image of the New York City police officer changed in New York since September 11?

KERIK: Well, I think the images -- you know, the transformation of the perception of the police department has been unbelievable, really. You know, usually, in policing in general -- not only in New York City, but around the country -- people's perception is usually based on one or two incidents that may occur in a police department. Here we had a number of incidents over the last three years, three, four incidents over three years, that gave us a really, you know, a negative perception in the communities.

On September 11, people got to watch the NYPD do something that they, realistically, do every day: running into those buildings, rescuing people, running into gunfights. These are things they do every day, but people don't get to see it as a whole. They don't get to see the big picture. On September 11 and afterward, people got watch constantly, 24 hours a day, of the heroism, the valor, the courage. And I think that has been a major -- had a major impact on the transformation of what people think about the NYPD today.

BLITZER: And is that respect for the police officer on the beat, is that evidenced still as people go by and do their day-to-day activities in New York City?

KERIK: Absolutely. It is today. And I also -- Wolf, I think it's really changed the way that police officers feel about the community. It wasn't often that somebody would walk up to a police officer in this city and just say, "Thank you for the job that you do." And because people are doing that now, the police officers feel better about the community. So it's really -- it's been a great benefit to both, I think.

BLITZER: You spent your whole life in law enforcement and you know, obviously, a great deal about it. What goes through your mind when you hear these reports about missed signals in the weeks and months and indeed years before September 11 that might, might -- and I use that word advisedly -- might have changed what happened on September 11?

KERIK: Well, I think I have to agree with the mayor. I think it's very difficult to say at this point until all the evidence comes out.

You know, in my opinion, the war on terrorism should have started back in 1993 after the bombing of the Trade Center the first time. You know we -- we forgot about the bombing then. The Khobar Towers, the Cole, the East African embassies.

I think right now we have worry about moving forward. We have to make sure that there's a management information system put together in this county that collects data, that collects intelligence and information, and then creates an ability for that information to be disseminated to the agencies that need it to fight this war on terrorism.

We also have to create a system of accountability somewhat like the police department's Comstat, the accountability system that ensures accountability, ensures those agencies are doing what they're supposed to be doing to get the job done. I think that's what we have to look to -- look at from this point on.

BLITZER: Potential tourists who want to visit New York are watching this program all around the world. How nervous should they be about going to New York City now in the face of almost these daily alerts that we're getting from the federal government to be on the lookout for this or that?

KERIK: Well, I don't think the daily alerts are primarily, you know, are focused directly on New York City and people shouldn't be intimidated. Whether it's New York City or L.A. or Chicago or Miami, we can't be intimidated by these threats. We can't be intimidated by the terrorists. We have to send them a message, "You're not going to frighten us into staying in our houses."

The police departments, the FBI, the president, they're all focused on this now. We're going to do the best job we can to make sure that the country is safe and secure. And we have to bring the country back, and one way do that is to come back into New York City. And Mayor Giuliani and I walk the streets of this city constantly, and we're approached by people from out of town who say, "I came here because you asked me. I came here to show my support for you and this country," and I think that's what people have to do all around the country.

BLITZER: You want them to come even right now, don't you?

KERIK: Absolutely. Absolutely. It's a great place to be in the summertime, Wolf.

BLITZER: All right. I'll be coming up. Commissioner, always good to have you on our program. Thanks for your outstanding work in the days and weeks and months, indeed, after September 11.

Coming up next, we'll check in with Richard Quest to see what's happening with that fire in London outside Buckingham Palace.

Also, our LATE EDITION Final Round. They'll weigh in on the big stories of the week. The Final Round, right after a news alert.

(COMMERCIAL BREAK)

BLITZER: Time now for our Final Round.

Joining me, Julianne Malveaux, the syndicated columnist; Peter Beinart of the New Republic; Jonah Goldberg of the National Review Online; and Robert George of the New York Post.

We begin with our quote of the week, courtesy of the Wall Street Journal. In a scathing editorial, the paper called on FBI Director Robert Mueller to resign because of the agency's failure to pick up on the September 11 clues.

It said, among other things, this: "It's no surprise that President Bush and Attorney General Ashcroft are standing by their man. Mr. Ashcroft this week praised him as a battle-tested leader and the right man for the job. The director could relieve their embarrassment by completing this week's mea culpa with an honorable resignation."

Robert, can -- should that happen?

ROBERT GEORGE, NEW YORK POST: Yes. As a matter of fact, the New York Post called for his resignation about 10 days ago.

In a city where both parties keep on talking about personal responsibility and accountability, it would be appropriate for somebody to fall on their sword, given all the bungling of the FBI.

Coleen Rowley is going to be speaking before Congress. She referred in her memo to improper political considerations that were going on that contributed to a lot of these foul-ups. I think, if she explores that a little bit more, heads could still roll.

BLITZER: But, Peter, is it fair to the director? He took office, what, a week, or five days before September 11. Can he be blamed for all those missed signals?

PETER BEINART, NEW REPUBLIC: I don't think he's the guy whose head should roll. I think it was actually a weak editorial. Most of what it focused on was things he hasn't done since September 11. When you can really look at other people, like George Tenet at the CIA, who had been in office for years and who hasn't instituted as major a structural overhaul at his organization as Mueller has. I think Mueller is a scapegoat here.

BLITZER: What do you think?

JONAH GOLDBERG, NATIONAL REVIEW ONLINE: Yes, it's a rare moment that I disagree with the editorial policies of both the New York Post and the Wall Street Journal, but I think both have it wrong. This is not -- he is not the right scapegoat.

And if Louis Freeh had still been in office, I think that would have been obvious that his head should roll. But this guy started with a clean slate, and this is not the time for training a new FBI director.

JULIANNE MALVEAUX, SYNDICATED COLUMNIST: Question, is Mr. Mueller committed to changing the culture of the FBI? Clearly, he inherited it, but what has he done about it since then?

I think that's the issue, and I think that's why this memo and her testimony can be so explosive, because I think the question is whether or not he's prepared to take some hard steps. And it's not clear to me that he is.

There are a whole lot of people in this town who could fall on their swords. Let's start with Mr. Ashcroft. Let's even talk about...

BLITZER: All right.

MALVEAUX: Oh, well, let's not go there.

GEORGE: I think Mueller's obfuscation since September 11, I think, is reason enough for him to go, not the least of which, saying that he couldn't stop another terrorist attack.

BLITZER: All right. In the new issue of Newsweek, there's another potential bombshell. Newsweek is reporting the CIA tracked two of the 9/11 hijackers from an al Qaeda meeting in Malaysia into the United States months before the attacks, but did nothing with the information, at least until August.

Julianne, will the CIA be the next agency in the hot seat? MALVEAUX: Well, the Newsweek report is scathing. I mean, they could have found these guys. They had registered vehicles. They have credit cards. They're in a phone book. I mean, just by not coordinating information, the CIA really dropped the ball.

But they're not the only ones. We've talked about the FBI. The National Security Agency, there's a piece on the front page of the Outlook section in the Post today that talks about the ways that they've dropped the ball.

So what it seems to me is that we've been very, very complacent about our national security, and now lots of things are coming to light. Let's look at the CIA, but let's look at them all.

BLITZER: Jonah.

GOLDBERG: Yes, I agree, actually. I think Julianne points out to the fact that this isn't much a failure of personnel, it's a failure of policy. That we've had a policy going back a decade of not treating the war on terrorism, not treating terrorist threats seriously.

And you know, it's one of the cliches of Washington that, you know, if everybody is to blame, then no one in particular is to blame. But in this case, I think there's more than a grain of truth to that, and we need a top-to-bottom review.

I do think that Mueller has done a lot with the FBI to change the culture over there. And you know, if the CIA is lucky, they'll get their own Crowley memo, because, when you look at it, this Crowley memo has turned out to be a golden goose for the FBI, because they get all these new powers that they wanted for so long and these reforms that they wanted for so long, as supposedly a response to an internal whistle-blower.

GEORGE: But don't you think that's absolutely awful? You know, in any other situation, you know, if an employee screws up, they get fired. If a business screws up, they go out of business. You're the biggest law enforcement agency in the country, you screw up, and you get more powers.

BEINART: Yes, but it's not only them. I think, first of all, actually, one of the interesting points, to go back to what Julianne said, if the question is policy of not taking terrorism seriously, I think a hidden bombshell in The New York Times today is that Ashcroft last year opposed the FBI's request for more terrorism funding in the budget, which I think was actually extraordinary.

A second point, which I think needs to get more attention is, why on earth is our CIA Director George Tenet become our de facto envoy to the Middle East, when he's in the middle of the most important mission, practically, in modern American history? It just seems to me nutty.

BLITZER: Those are good questions. Let's just move on. We've got a lot of stuff cover. The FBI director, Robert Mueller, is defending, of course, his embattled agency. Earlier today, he said, "Despite the missed clues about September 11, the FBI is more prepared to counter terrorism.

(BEGIN VIDEO CLIP)

MUELLER: There will be other attacks, but we -- whether it be the FBI, the CIA, NSA, Homeland Security -- we are working together in ways that we hadn't previously, and we are absolutely safer.

(END VIDEO CLIP)

BLITZER: Jonah, are we?

GOLDBERG: I think we're safer, although in some ways I think it's a bit of an irrelevant question at this point, because obviously this is a long-haul proposition and there are going to be setbacks. Any major serious undertaking by a nation of this nature is going to involve setbacks, and that means that they're probably going to be mistakes and so forth.

And I do think that one of the things that would make us safer is if we could counter some of the attitude that Robert has to these things, which says that if -- we have a political climate which says that if the leader of the FBI is actually honest and says that there's a terrorist attack coming, we should welcome that sort of honesty. We should also welcome the sort of honesty that allows people to make mistakes within these organizations and have a little more flexibility toward these things.

GEORGE: Look, when the FBI -- it's fine to say that there are terrorist attacks coming. If he says, though, "It's inevitable and we can't stop it. Oh, I wish I was a little bit more optimistic," I'm sorry, that is -- that's defeatist. Would you want a general that's going to say, "Oh, with this attack coming..."

BEINART: But everyone has said that. I mean, Rumsfeld's said that or Cheney has said that. I mean, everyone has basically said...

GEORGE: But he is the point person.

BEINART: But he's not the only one, though.

GEORGE: He's the point person in charge of trying to stop it.

BEINART: Only within the United States. The CIA is supposed to keep us, you know, safer outside of our borders.

GEORGE: I agree with you, what you just said on Tenet and CIA.

MALVEAUX: You know what? But it just seems to me that it is inevitable that there will be more attacks. I mean, we have so many major cities. We have all these screw-ups from the past that we aren't going to be -- who knows how many terrorists are here?

One of the things that I'd like to bring up is -- it's off point, but it is on point -- heads should roll, because we need more diversity in these intelligence agencies. When these issues of racial profiling -- we've sparred about these -- come up, we need to have intelligence agencies that are representative enough that nobody feels like they're picked on.

The other thing that's really happening, there was a piece in the New York Times last week about a professor at Columbia who had applied to be an interpreter, and the process was just so ridiculous. We need more intelligence people who speak Arabic languages. We have a...

BLITZER: We're going to take a break. That professor was from NYU. The people at NYU are going to be very sensitive.

(LAUGHTER)

MALVEAUX: They're going to be real mad at me.

BLITZER: ... Columbia University, NYU, there's a little rivalry.

GEORGE: There's no NYU representation on this panel.

(LAUGHTER)

MALVEAUX: Nor Columbia, for the record.

BLITZER: We have to take a quick break. Your phone calls and e- mail, when our Final Round continues.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

We're going to resume our conversation with our Final Round in just a second, but I want to update you on the latest developments from Buckingham Palace.

(NEWSBREAK)

BLITZER: Let's resume our Final Round now. The defense secretary, Donald Rumsfeld, is traveling to South Asia this week to try and head off a potential war, potentially a nuclear war, between India and Pakistan.

Earlier today, both sides insisted they were not seeking to blame each other for the stalemate.

(BEGIN VIDEO CLIPS)

LODHI: The Indians refuse to talk to us. The Indians reject dialogue. We have advocated a peaceful resolution of this crisis.

NAMBIAR: Our prime minister said that we don't favor such a meeting for a simple reason: If you have a meeting, you must have something to discuss.

(END VIDEO CLIPS) BLITZER: Actually they are blaming each other for the continued stalemate, a minor misspeak.

(LAUGHTER)

BLITZER: Peter, will Secretary Rumsfeld be able to cool things down over there?

BEINART: I'm afraid he may not. I think, to understand this crisis, you have to go back to January. Remember, we were on the brink of war in January. Musharraf made a very big speech where he said he would crack down on terrorism. The United States pushed the Indians to give him some time. But the truth is that he didn't. The crackdown was really a sham. The terrorism has continued, and the Indians are now basically impervious to Musharraf's promises.

And I think the Bush administration made a really critical mistake by not keeping the pressure on over those past few months. They let their attention, at the highest levels, go to other things, and I think we're paying the price.

BLITZER: Jonah?

GOLDBERG: I think that's largely true, and I think Don Rumsfeld, he may put out the fire that we see above the surface, but this is like a coal fire, it's been burning, I think, a lot longer than January. January was the last major flare-up, but this is a historical grievance that goes back 10, 15 years at least.

BLITZER: 54.

GOLDBERG: Well, no, the radical Islam component of this has a much more recent, 1980s chapter to it. And they've been fighting over this land for five decades, but it's only gotten this ugly recently.

One of the lessons -- I hate to say it, to be contrarian on this -- one of the lessons we have learned from this, though, I would say, is that nuclear deterrence works, in this sense: They would obviously have been at war already if Pakistan didn't have nuclear bombs.

GEORGE: Well, no, I think that's quite true. Basically, Rumsfeld...

BLITZER: That might be true, but it's very scary.

GEORGE: Well, yes. It is. It really is.

But Rumsfeld did build up good relations both between Pakistan and India in the context of the war on terror. And so he, even more than maybe some of the people in the State Department, may be able to help cool them. But it's not necessarily optimistic...

BLITZER: Are you surprised that they're sending Rumsfeld to do this instead of Colin Powell?

MALVEAUX: Actually, I am. But I also -- and I'm wondering really what he brings to the table. Of course the United States has to get involved. There's 17 million lives at stake if there is a nuclear conflict, because both sides have the weapons. But I'm not sure really what Rumsfeld uniquely brings to the table. I think Powell is a better mediator, conciliator.

BLITZER: Peter, do you have an answer to that question?

BEINART: Well, I think that they may feel that he can talk tough to the generals.

But one of the problems here is that -- of which Americans are not aware, Musharraf is much less popular in Pakistan today than he was back in the fall, partly because he's betrayed many of his own promises about a return to democracy, which America has let him get away with. He's in a very weak political position, and I think that's part of the reason he can't back down here.

BLITZER: He may not be able to control all of the extremists within his own ranks. Is that what you're saying?

BEINART: That's right, that's right.

BLITZER: Which is a source of great concern.

I thought General Powell was once a general too. He couldn't talk tough to generals?

MALVEAUX: He may be a little more busy with other things, of course...

GEORGE: Rumsfeld has been in the area quite a lot over the last few months and has built up those relationships.

BLITZER: Can you think of anything, anything more significant, more important right now than trying to avoid a nuclear exchange between India and Pakistan? The winds could blow radiation, dust could be sent all over, including right here where we are right now.

GOLDBERG: Yes. And I do think it's kind of funny, when you listen to some of the talking heads talk about dangers of nuclear war and they say, "Now, the real reason to be concerned is that fallout might blow on Los Angeles." To me, deaths of 17 million people are important than some respiratory disease in Los Angeles.

And that said, yes, of course, it's a huge issue. The problem is, it took a long time to build up. The real issue here is radical Islam, and you have a problem where Musharraf is trying to play it both ways, wants to be a little democratic and a little radical Islam, and you can't be caught in the middle, and it's a mess. BLITZER: All right. Let's move on and talk a little bit about what happened in New York at Ground Zero. This week, the city held a very moving ceremony to mark the end of recovery efforts. The former New York mayor, Rudy Giuliani, reflected on the past eight months.

(BEGIN VIDEO CLIP)

GIULIANI: The work that's been done, the way it was organized, the heroism of the work, the skill, the professionalism, is just absolutely remarkable. It has to at least help, in some ways, to restore your spirit about what a people who live in freedom can accomplish.

(END VIDEO CLIP)

BLITZER: Julianne, what should become of the World Trade Center site?

MALVEAUX: I'd like to see it as a meditation and retreat-type space. I know that may not be economically viable, but more than -- about 1,700 people, families have no remains from their people. And so, it seems to me that at least part of this ought to be a retreat site or a meditation site, a peace center.

Now, there are going to be six public forums in New York, and you'll hear from the people of New York. And so, obviously, since I'm not a New Yorker, I think that, ultimately, wisdom should defer to what kind of consensus comes out of that.

BLITZER: You're a New Yorker.

GEORGE: Yes. As a New Yorker, I would say, I mean, a portion of it, obviously, should be a memorial and meditation and so forth. But generally, the large part of it should return to being a commercial center, in a sense, you know, building on what was there and the activity that was there and renewing it. Maybe it's not going to look exactly like the Twin Towers, but it should be a commercial center.

BLITZER: All right. We're going to take a quick break. We have a lot more to talk about, including our Lightning Round.

We'll also continue to monitor that breaking story of Buckingham Palace in London, where a fire has just broken out -- this during the start of the Jubilee week, marking Queen Elizabeth's accession to the throne.

Stay with us.

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: Let's continue now with our LATE EDITION Final Round.

Wednesday is the year anniversary the Democratic majority in the U.S. Senate after the Vermont Senator Jim Jeffords left the Republican Party to become an independent.

Can the Democrats keep their slim lead in November, Jonah?

GOLDBERG: Frankly, I don't know. I mean, yes they can, and no they can't. It's too close to call on my mind, and too many things can change between now and election day. It's going to be close. I think plus or minus one or two.

MALVEAUX: It is going to be close, but there's some real exciting races. Ron Kirk (ph) in Texas. Paul Wellstone, the Democrats have spent major money defending his seat. In North Carolina, Elizabeth Dole has been hanging out with Enron folks, and that's been something that has made some attention.

So tight races and I think lots of breaking news.

BLITZER: A lot of people will be focusing on the North Carolina race. Is Erskine Bowles going to get that Democratic nomination?

BEINART: Yes, I think he will. That's probably a long shot for the Democrats. There are a few key races in the Midwest that are very important: South Dakota, Missouri, Minnesota in particular.

I give the Democrats a slight edge, because I think it probably will come down to debates over questions like Social Security and health care, where Democrats traditionally have a little bit of an edge.

BLITZER: Unless there's another major terrorist attack.

BEINART: Unless there's another major attack.

GEORGE: Exactly. I have to agree with Peter. I think it will be a slight edge to the Democrats.

I actually think Erskine Bowles, if he does get the Democratic nomination, I think he has a very good chance of upsetting Elizabeth Dole...

BLITZER: Really?

GEORGE: ... in North Carolina.

BLITZER: He's the former White House chief of staff under Bill Clinton, which leads me to my next subject.

GEORGE: Speaking of Bill Clinton.

(LAUGHTER)

BLITZER: Next year the University of Arkansas at Little Rock will offer a class on former President Clinton's presidency.

Would you, Julianne, sign up for Clinton 101?

MALVEAUX: I might be a guest lecturer, but I wouldn't sign up for the class.

BLITZER: Why?

MALVEAUX: Been there, done that, lived through that, Wolf. All of us in Washington who lived through all of that. Don't think -- I don't think we need to know anymore, do you?

BLITZER: Well, what about you? Can we learn anything from eight years of Bill Clinton's presidency?

BEINART: You know, I have to admit that some of the top national Democrats probably could learn a thing or two, because it has become clear since he left the political stage that he was much better at framing certain issues than most of the top Democrats now. He was much tougher than most of the people leading the Democratic Party now, so perhaps they could learn a thing or two.

BLITZER: Do you even think of the textbooks, the assignments, the papers that would have to be read for Clinton 101?

(LAUGHTER)

GOLDBERG: Well, I'll tell you, that highlights the problem with doing it, is that there's no good, recent, truly dispassionate scholarship on the issue. And when you read about it, it actually sounds like a pretty serious class that I actually would take, because I think, you know, my position on Bill Clinton is pretty clear, but he was a very transitional, transformational, important figure in American history for a lot of reasons that get overlooked because of all the baron-and-the-milkmaid act in the Oval Office.

(LAUGHTER)

You know, he was to Ronald Reagan in many ways what Eisenhower was to FDR. He confirmed the Reagan transformation, he moved the Democrats to the right, and there are a lot of important issues to study there.

BLITZER: Fortunately, I missed that pun (ph), but go ahead.

GEORGE: Jonah's right. He, in a sense, was probably the best Eisenhower Republican president we've had in the last 50 years, and he's an intriguing figure.

BLITZER: All right, let's talk a little bit about the World Cup. We have some World Cup soccer results, for those of you who are interested. England beat Sweden, Spain beat Slovenia.

(LAUGHTER)

Are you watching?

The whole world is watching except for everyone in the United States, Peter. What's going on?